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Services Marketing

DEPARTMENT OF MANAGEMENT STUDIES

Course Plan for the Academic Year : 2014-15Department : Management StudiesProgramme : Management StudiesYear & Semester : II & III SemesterSubject Code : Subject : Services MarketingName & Designation of the faculty : K.Senthil / Sr.Asst.Prof

Chapters Learning Outcomes Evaluation Weightage

Introduction

Students can understand the services, characteristics, growth, differentiate goods and services and classify the services Internal

1. Unit Test2. Case Analysis3. Assignment4. Internal Test5. Online Quiz6. Model Exam

20 MarksService Marketing opportunities

Understand market potential, extended marketing mix, trends, segmentation, targeting and positioning

Service Design & Development

Understand life cycle, new development, blue print and service quality measurement

Service Delivery, Pricing & Promotion

Understand strategies related to positioning, pricing, promotion & Delivery

ExternalWritten Exam 80 Marks

Service Strategies

Can chalk out strategies for the various service industries

Prepared by:-K.Senthil, Sr. Asst.Prof, DOMS, CCET

Services Marketing

CHETTINAD COLLEGE OF ENGINEERING & TECHNOLOGYDEPARTMENT OF MANAGEMENT STUDIES

LESSON PLANCODE :

SUBJECT: SERVICES MARKETING

FACULTY : K.SENTHIL

Unit – 1S.NO TOPICS Prd Book Page Method

1 Introduction to service marketing, definition 1124

1-43

1-5PPT

2 Service Economy, Scope of services, Growth of Service sectors 1

34517

4-111-55-94-1935-38

PPTOHP

3 Growth of Service sectors by comparing GDP and Employment opportunities of various countries 1

4516

1-55-94-19

6

PPTOHP

4 Reasons for the growth of services 1

3457

4-111-55-9

35-38

PPTOHP

5 Nature and characteristics of services 1 47

646-54 PPT

6 Difference between goods and services 1 5 12-14 PPT

7 Characteristics of Services 1

4567

8-1212-149-1346-54

PPT

8 Challenges and Issues in Service Marketing 1

4567

8-1212-149-1346-54

PPT

9 Challenges and Issues in Service Marketing 1

4567

8-1212-149-1346-54

PPT

Total 9


Services Marketing

Unit – 2

S.NO TOPICS Prd Book Page Method

1 Assessing Service Market Potential 1 4 29-38 PPT

2 Assessing Service Market potential 1 4 29-38 PPT

3 Classification of services 1 64

13-1820-27

PPTOHP

4 Service Marketing Mix 1 41

3325-27 PPT

5 Service Marketing Mix 1 41

3325-27 PPT

6 Environment & Trends 1 1 4-19 OHP

7 Market segmentation 1 78

95-10594-112 PPT

8 Market segmentation 1 78

95-10594-112 PPT

9 Target market 1 78

107-11094-112 PPT

Total 9

Unit -3

S.NO TOPICS Prd Book Page Method

1 Service level 1174

62-65142-15085-93

PPT

2 Service life cycle 1178

65-70263-270121-123

PPT

3 New service development 1

4158

72-7794-96

200-205123-129

PPT

4 Service blue printing 1517

205-213214-221275-285

PPT


Services Marketing

5 Service blue printing 1 56

205-213116 PPT

6 Service quality 1467

258-27282-102289-314

PPT

7 Service quality 1 46

258-27282-102 PPT

8 Service quality 1 67

82-102289-314 PPT

Total 8

Unit -4S.NO TOPICS Prd Book Page Method

1 Service positioning strategies 1 76

111-131270-274 PPT

2 Positioning Maps 1 76

111-131274-275 PPT

3 Designing Service Delivery 1 47

188-216273-283 PPT

4 Distribution of services 1 16

249-263228-242 PPT

5 Distribution of services 1 16

249-263228-242 PPT

6 Pricing of services 1 4 102-110 PPTOHP

7 Pricing of services 1 76

169-197201-222

PPTOHP

8 Pricing of services 1 7 169-197 PPTOHP

9 Service Marketing Triangle 1 1 1 OHP

10 Integrated Service Marketing Communication 1 47

112-153201-213

PPTOHP

11 Integrated Service Marketing Communication 1 67

342-368225-244

PPTOHP

Total 11


Services Marketing

Unit -5S.NO TOPICS Prd Book Page Method

1 Marketing of Health Services 1 1 403-409 PPT

3 Marketing of Hospitality 1 1 403-409 PPT

4 Marketing of Tourism 1 1 403-409 PPT

5 Marketing of Finance 1 1 403-409 PPT

6 Marketing of Logistics 1 1 403-409 PPT

7 Marketing of Educational services & Consultancy 1 1 403-409 PPT

8 Marketing of Entertainment & Public Utility 1 1 403-409 PPT

Total 08

Total – 45 Periods

References:

1. Balaji, “Service Marketing”, S.Chand, New Delhi, 2002

2. Christopher Lovelock, “Service Marketing”, Perason Education Asia, 2001

3. Cengiz Hawksever etal, “Service Marketing”

4. Vasanthi Venugopal, “Service Marketing”, Himalaya Publishing House

5. Valarie.A.Zeithaml, et.al., “Services Marketing”, Tata Mcgraw Hill, 2000

6. Kenneth E-Clow, “Service Marketing Operations Management and Strategy”, Biztantra,

7. Rampal Gupta, “Service Marketing”, Galgotia Publishing Company, New Delhi

8. Govind Apte, “Services Marketing”, Oxford University Press, New Delhi 2004

9. Statistical Data Collected from various websites


Services Marketing

ASSIGNMENT

1) Identify growth rate ( 10 years) of your preferred service industry ( Completion of half unit)

2) Select one service provider in your town identified the problems faced by them because of

service characteristics ( Completion of 1 unit)

3) Identify the service quality dimensions of your preferred services and measure the service

quality with the help of survey from 50 customers (Completion of 3 unit)

4) Find out the positoning strategy adopted by the preferred service organization (Completion of

3-1/2 Unit)

5) Chalk out service marketing strategies of your preferred service organization

CASE STUDY

1. Will they turn Again - Service delivery - Service Marketing – Rampal Gupta Page – 539

2. The United Indian Bank - Consumer Behaviour - Services Marketing – Govind APTE,

Page – 55

3. Marketing Consultancy Services – Service product Component – Service marketing –

Rampal Gupta, Page – 544

Faculty HOD


Services Marketing

CHETTINAD COLLEGE OF ENGINEERING & TECHNOLOGYDEPARTMENT OF MANAGEMENT STUDIES

MaterialSUBJECT: SERVICE MARKETING

FACULTY : K.SENTHIL

Unit – 1

Definition:

“Activities, benefits, or satisfactions which are offered for sale or provided in connection with

the sale of goods”

-American Marketing of Association – (1960)

“Services are separately, identifiable, intangible activities which provide want satisfaction when

marketed to consumers and / or industrial users and which are not necessarily tied to the sale of a

product or another service”

- William J.Stanton – (1974)

“An activity or a series of activities which take place in interaction with a contact person or a

physical machine and which provides consumer satisfaction”

- Lehtinen – (1983)

“Any activity or benefit that one party can offer to another that essentially intangible and odes

not result in the ownership of anything”

- Philip Kotler and Bloom – (1984)

“A service is an activity or series of activities of more or less intangible natue that normally, not

necessarily take place in interactions between the customer and service employees and / or

physical resources or goods and / or systems of the service provider, which are provided as

solutions to customer problems”

- Christian Gronroos – (1990)

“Services are deed, processes, and performances”

- Zeithmal V.A. and Mary Jo Bitner – (1996)


Services Marketing

Evolution of Service Marketing:

Fisk, Brown and Bitner identify three distinct stages in the evolution of services

marketing. They are as follows.,

1) Crawling out stage - took place prior to 1980

2) Scurrying stage - between 1980 to 1986

3) Walking erect stage - from 1986 to 2000

4) Galloping Stage - From 2000 to till date

Crawling out stage - took place prior to 1980

In this stage discussion centered around the need for a separate body of literature to deal

with the specific problems of the services sector.

Donnelly highlighted differences between the marketing channels used for services and

those used for physical goods and implications for marketing strategy. Marketing traditionalist

argued that service organization did not need a separate body of theory, and that existing

marketing theories could, and should, be applied to service organizations. They considered

services as an offer tied up with physical product. Services marketing academics and

practitioners argued that services required special treatments as a result of their distinctive

characteristics.

Scurrying stage - between 1980 to 1986

Efforts were made to classify services more clearly and attention focused heavily on the

crucial issue of managing quality in service operations. Zeithaml, Berry and Parasuraman

developed their pioneering gaps model. Booms and bittner developed their expanded marketing

mix for services which took into account the distinctive characteristics. They add three more p’s

to the original marketing mix. They are people, process and physical evidence. For the first time

text books on services marketing began to be produced.

Walking erect stage - from 1986 to 2000

Since 1986 there has been almost no discussion of whether services are different from

goods, but rather the literature has focused on specific marketing problems on service

organizations. They include consideration of service encounters, service design, perceived

service quality and customer satisfaction, internal marketing and relationship marketing.


Services Marketing

Galloping Stage:

Since 2000, there has been an increase growth of the service sector and services are the

main contributors to the GDP of the country.

Service Based Economy:

Services marketing concepts and strategies have developed in response to the tremendous

growth of service industries, resulting in their increased importance to United States and world

economies. In 1999 the service sector represented 80% of total employment and at least 78% of

the Gross domestic product of the United States. Industrialized nations use a standard called the

Gross Domestic Product to measure the output. GDP, is one of the ways for measuring the size

of its economy. The GDP of a country is defined as the market value of all final goods and

services produced within a country in a given period of time. It is also considered the sum of

value added at every stage of production of all final goods and services produced within a

country in a given period of time.

CountryGDP Agricultu

re%

Industry%

Service%

AgricultureMillion $

IndustryMillion $

ServiceMillion $

World46660

000 4% 32% 64% 186640014931

20029862

400European Union

13620000 2.10%

27.30%

70.50% 286020

3718260

9602100

United States

13220000 0.90%

20.40%

78.60% 118980

2696880

10390920

Japan49110

00 1.60%25.30

%73.10

% 7857612424

8335899

41Germany

2858000 0.90%

29.10% 70% 25722

831678

2000600

China25120

00 11.90%48.10

% 40% 29892812082

7210048

00United Kingdom

2341000 1%

25.60%

73.40% 23410

599296

1718294

France21540

00 2.20%20.60

%77.20

% 4738844372

416628

88

Italy17800

00 2%29.10

% 69% 3560051798

012282

00Canada 10890 2.30% 29.20 68.50 25047 31798 74596


Services Marketing

00 % % 8 5

Spain10810

00 3.90%29.40

%66.70

% 4215931781

472102

7

India79610

0 19.90%19.30

%60.70

% 15842415364

748323

3South Korea

768500 3.30%

40.70% 56% 25361

312780

430360

Mexico74150

0 3.90%25.70

%70.50

% 2891919056

652275

7

For three successive year, the Indian economy has registered a highly impressive

growth during fiscal 2005-06. Sustained manufacturing activity and impressive performance of

the services sector with reasonable support from the recovery in agricultural activity have

added greater momentum to this growth process. After recording some slowdown in the third

quarter (October-December) of 2005-06, real gross domestic product (GDP) registered a sharp

increase in the fourth quarter (January-March) of 2005-06 benefiting from a pick-up in almost

all segments of agriculture, industry and services. According to the revised estimates released

by the Central Statistical Organization (CSO) in May 2006, real GDP accelerated from 7.5 per

cent in 2004-05 to 8.4 per cent during 2005-06. The Indian economy has, thus, recorded an

average growth of over 8 per cent in the latest three years (2003-04 to 2005-06).

Growth Rates of Real GDP

(Base Year : 1999-2000) (Per cent)

Sector2000-01

to 2002-03 (Average

2003-04

2004-05

2005-06

2004-05

2005-06

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Agriculture -0.2 10.0 0.7 3.9 3.5 -0.2 -1.2 1.5 3.4 4.0 2.9 5.5Allied Activities (23.5) (22.2) (20.8) (19.9) - - - - - - - -1.1 Agriculture -0.5 10.7 0.7 - - - - - - - - -Industry 5.2 6.6 7.4 7.6 6.6 8.0 8.1 6.8 9.5 6.3 7.0 7.9

(19.7) (19.5) (19.5) (19.3) - - - - - - - -2.1 Mining and Quarrying

4.4 5.3 5.8 0.9 8.2 6.0 5.7 3.7 3.1 -2.6 0.0 3.0

2.2 Manufacturing

5.7 7.1 8.1 9.0 6.6 8.3 9.2 8.1 10.7 8.1 8.3 8.9

2.3 Electricity, Gas and Water Supply

2.8 4.8 4.3 5.3 4.9 7.9 3.1 1.4 7.4 2.6 5.0 6.1


Services Marketing

Services 6.6 8.5 10.2 10.3 10.0 8.2 10.6 11.6 10.1 10.3 9.7 11.0(56.8) (58.3) (59.7) (60.7) - - - - - - - -

3.1 Trade, Hotels, Restaurants, Transport, Storage and Communication

8.5 12.0 9.7 11.0 10.2 12.9 10.6 11.5 10.6 11.2 11.7 11.0

3.2 Financing, Insurance, Real Estate and Business Services

6.5 4.5 9.2 9.7 8.8 7.5 9.7 10.7 8.8 10.5 8.9 10.5

3.3 Community, Social and Personal Services

4.1 5.4 9.2 7.8 10.7 4.8 8.5 12.7 7.3 8.0 8.4 7.6

3.4 Construction

5.9 10.9 12.5 12.1 8.9 6.8 20.8 13.5 12.4 12.3 11.5 12.0

Real GDP at Factor Cost

4.6 8.5 7.5 8.4 7.9 6.7 7.0 8.6 8.5 8.4 7.5 9.3

Indicators of Service Sector Activity(Growth rates in per cent)

Sub-sector 2004-05 2005-06 April2005 2006

Tourist arrivals 23.7 11.7 19.7 $ 20.0 $Commercial vehicles production 28.6 10.6 -5.3 49.7Railway revenue earning freight traffic 8.1 10.7 14.9 11.0New cell phone connections 10.4 89.4 7.6 167.0Cargo handled at major ports 11.3 10.3 15.8 -2.0Civil aviationa) Export cargo handled 12.4 7.3 12.0 10.1b) Import cargo handled 24.2 15.8 14.6 19.9c) Passengers handled at international terminals 14.0 12.8 9.9 16.2d) Passengers handled at domestic terminals 23.6 27.1 19.2 54.0Roads: Upgradation of Highways 16.1 -23.4 – –Cement 8.2 10.7 12.6 $ 8.9 $Steel 7.6 6.0 13.9 $ 7.5 $Aggregate deposits 11.9 22.3 14.9 @ 20.7 @Non-food credit 31.6 38.4 31.0 @ 32.9 @


Services Marketing

Central Government expenditure 5.6 2.2 -1.0 $ 53.9 $

$ : April-May.@ : Year-on-year as on July 7.

Agriculture:

India ranks second worldwide in farm output. Agriculture and allied sectors like forestry,

logging and fishing accounted for 18.6% of the GDP in 2005, employed 60% of the total

workforce[3] and despite a steady decline of its share in the GDP, is still the largest economic

sector and plays a significant role in the overall socio-economic development of India. Yields per

unit area of all crops have grown since 1950, due to the special emphasis placed on agriculture in

the five-year plans and steady improvements in irrigation, technology, application of modern

agricultural practices and provision of agricultural credit and subsidies since the green

revolution. However, international comparisons reveal that the average yield in India is generally

30% to 50% of the highest average yield in the world.[50]

Industry

India is fourteenth in the world in factory output. They together account for 27.6% of the

GDP and employ 17% of the total workforce.[3] Economic reforms brought foreign competition,

led to privatisation of certain public sector industries, opened up sectors hitherto reserved for the

public sector and led to an expansion in the production of fast-moving consumer goods.[54]

Post-liberalisation, the Indian private sector, which was usually run by oligopolies of old

family firms and required political connections to prosper was faced with foreign competition,

including the threat of cheaper Chinese imports. It has since handled the change by squeezing

costs, revamping management, focusing on designing new products and relying on low labour

costs and technology.[55]

Services:

India is fifteenth in services output. It provides employment to 23% of work force, and it

is growing fast, growth rate 7.5% in 1991–2000 up from 4.5% in 1951–80. It has the largest

share in the GDP, accounting for 53.8% in 2005 up from 15% in 1950. [3] Business services

(information technology, information technology enabled services, business process outsourcing)


http://en.wikipedia.org/wiki/Business_process_outsourcing

http://en.wikipedia.org/wiki/Information_technology_enabled_services

http://en.wikipedia.org/wiki/Information_technology

http://en.wikipedia.org/wiki/#_note-CIA

http://en.wikipedia.org/wiki/#_note-compete

http://en.wikipedia.org/wiki/#_note-theecon-india-economic-structure

http://en.wikipedia.org/wiki/Final_goods


http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

http://en.wikipedia.org/wiki/#_note-Datt-5

http://en.wikipedia.org/wiki/Green_revolution

http://en.wikipedia.org/wiki/Green_revolution

http://en.wikipedia.org/wiki/Irrigation

http://en.wikipedia.org/wiki/Yield


http://en.wikipedia.org/wiki/Fishing

http://en.wikipedia.org/wiki/Logging

http://en.wikipedia.org/wiki/Forestry

http://en.wikipedia.org/wiki/Agriculture

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

Services Marketing

are among the fastest growing sectors contributing to one third of the total output of services in

2000. The growth in the IT sector is attributed to increased specialisation, availability of a large

pool of low cost, but highly skilled, educated and fluent English-speaking workers (a legacy of

British Colonialism) on the supply side and on the demand side, increased demand from foreign

consumers interested in India's service exports or those looking to outsource their operations.

India's IT industry, despite contributing significantly to its balance of payments, accounted for

only about 1% of the total GDP or 1/50th of the total services.[57] Excellent infrastructure in the

service sector and the lowest communication cost has helped India to be a dominant player in

these sectors.

Environmental Trend and Emerging Service markets

Environmental

TrendService Market

Consumer Affluence

Dine out habits, travel, entertainment, clubs, repairs and servicing,

health care, carpet and dry cleaning, domestic services, banking and

investments, retailing, insurance.

Working WomenDomestic services, travel, nurseries, fast food restaurants, financial

services, marriage counseling, retailing, personal care.

Greater Life

Expectancy

Hospitals, nursing homes, entertainment, travel, resorts, leisure

services, investments and banking

Complexity of LifeTravel, legal aid, tax counseling, professional services, airlines,

courier services, insurance banking.

New young / YouthEntertainment, leasing, fast food, travel, picnic resorts, educational

institutes, tutorial aids, counseling, retailing

Corporate Crowd

Hotels, advertising, legal services, recruitment services, management

consultants, health care, airlines, travel booking, courier services,

insurance, banking, marketing research.

Product innovationRepair and servicing services, training and education, sharing

services.

Growing Product

ComplexitiesExpert advice, specialists


http://en.wikipedia.org/wiki/#_note-4

http://en.wikipedia.org/wiki/Balance_of_payments

http://en.wikipedia.org/w/index.php?title=Indian_IT_industry&action=edit

http://en.wikipedia.org/wiki/Outsourcing

http://en.wikipedia.org/wiki/Supply_and_demand

Services Marketing

Reasons for Growth in Service Sector:

Movement to information age

Shift to industrialized economy

Aging population

Longer life expectancies

Increase leisure time

High per capita income

Changing social and cultural values

Advances in technology

Changing Life Style

Increase in Affluence Lawn Care, Carpet and Dry cleaning

Increase in Leisure Time Travel agencies & resorts, entertainments

Women in working places Day Care nurseries, Home help & away from home meals

Changing World

Increase Complexity of life Accounting services, legal advisors

Increase Life Expectancy Nursing homes, Health care, gyms

Ecology and Resources Bus services, car rentals, lease finance, concerns Environmental consultants

Changing Economies

Globalisation Courier Services

Privatisation Telecom, Cellular, Internet

Changing Technology

New products Computer aided services

Product Complexity Annual Maintenance, contracts

Growth of Service Industries: Cause and Effect

Cause Effect

Technological advances Higher complexity of products requiring skilled specialists


Services Marketing

Globalization More business internationalizationDeregulation policies Privatization of regulated sectorsCompetition and need for higher productivity Specialization / Expert Knowledge

Cost effectiveness drives Optimum manpower use and sub-contracting less critical functions

Computer ExplosionSpeed of work performance and availability of sound, motion and picture at a affordable cost

Overall increase in affluence

Increased spending power wish for comforts, resulting in demand for those services which consumer himself does not want to perform anymore

Increasing percentage of working women Work performed by women earlier when at home now being done by somebody else

More leisure time Shift towards pleasure / entertainment

Greater Life expectancy Desire to live long has resulted in special care facilities

Increase complexity of life Need for services of specialists because of complex issues required to be handled

Scarcity of resources and concern about ecology

Need for services which can supplement and meet resources crunch

Demographic changesDual career families where parents have less time to prepare meals and do house keeping

Urbanization Fast, mechanical, and self centered life and deterioration in law and order

Evolving Environment of Services:

Changing patterns of government regulation

Relaxation of professional association restrictions on marketing

Privatization of some public and not profit services

Technological innovations

Growth of service chain and franchise networks

Internationalization and globalization

Pressures to improve productivity

The service quality movement


Services Marketing

Expansion of leasing and rental businesses

Manufacturers as service providers

Need for public and non profit organizations to find new income

Hiring and promotion of innovative mangers

Competitive Trends for the New Millennium:

Customer satisfaction and customer focus

Value

Total quality management and service quality

Emphasis on service as a key differentiator in manufacturing firms

New measurement systems that link customer satisfaction with financial goals and

operational measurements

Internationalization of services

Service Characteristics:1) Intangibility

2) Perishability

3) Inseparability

4) Heterogeneity

Intangibility: -

Services are performances or actions rather than objects that cannot be seen, felt, tasted,

or touched in the same manner that we can sense tangible goods. For example the doctor is

diagnosing the problems of the patient and gives treatment for his illness. In that services the

consumer can’t able visualize the service rendered by the doctor but he can enjoy the services

done for him. Because of the intangibility of services they cannot be inventoried, patented,

readily displayed or communicated and pricing is difficult.

Perishable:-

It refers to the fact that services cannot be saved, stored, resold, or returned. A

unoccupied room of a star hotel cannot be sold on some other day or in demand period. A

unsold ticket of entertainment show cannot be added in next show. This is in contrast to the

goods that can be stored in inventory or resold another day, or even returned if the consumer is


Services Marketing

unhappy. So the services are difficult to synchronize supply and demand with services and it

cannot be returned or resold.

Inseparability:-

Non-perishable goods can be suitably inventoried and sold or delivered to the customer at

a date later than that of production. But services can’t be like this because it is perishable. The

services have to be rendered in real time, when the customer needs it. Most of the goods are

produced first, then sold and consumed; most services are sold first and then produced and

consumed simultaneously. This means the customer is present while the service is being

produced and this views and may even take part in the production process. This also means that

frequently customers will interact with each other during the service production process and thus

may affect each other’s experiences. For example – Doctor can able to render service to the

patient only in the presence of the patient. Otherwise he can do it if he has some direct contact

with help of medias. Without the doctor no one can render services to the patient. So customers

participate in and affect the service and interact with each other, employees affect the service

outcome, decentralization is necessary and mass production is difficult.

Heterogeneity:-

Services are performances, frequently, produced by humans; no two services will be

precisely alike. The employees delivering the service frequently are the service in the

customer’s eyes, and people may differ in their performance from day to day or even hour to

hour. It results because no two customers are precisely alike, each will have unique demands or

experience the services in a unique way. For example- Handling a class by a lecturer is not same

in all the days. It may differ based on their situation, student’s knowledge, hour and etc. So

delivery and customer satisfaction depend on employee actions, quality depends on many

uncontrollable factors, no sure knowledge that the service delivered matches what was planned

and promoted.

Problems and Strategies in service MarketingCharacteristics Problems Strategies

Intangibility Can not be easily displayed Cannot be patented

Provide tangible cues Stimulate word of mouth Use personal source Use post purchase

communicationInconsistency Standardization hard to Stress standardization and


Services Marketing

achieve Hard to setup quality control Can only predict quality or

determine it after service is performed

performance Focus on employee training

programes Consider licensing and other

forms of credential requirements

Inseparability Harder to mass produce product

Less efficient than goods production

Customer must be present

Needs strong training programmes, incentives

Focus on personal attention

Inventory Value can be short lived Capacity is finite Time period may be limited Cannot be inventoried

Focus on convenience saving time, fast service

Extended hours Focus on competence and

expertise Predict fluctuations in demand Manage capacity to balance

supply and demand

Classification of services:


Services Marketing


Services Marketing

Nature and Role of Goods Marketing:

Nature and Role of Service Marketing:


Preproduction Marketing

Post production Marketing

Production

Consumption

Create Awareness

Build Brand Preferences

Demonstrate Benefits

Induction Word of Mouth Communication

Preproduction Marketing

Post production Marketing

Production consumption

Create Awareness

Build Brand Preferences

Demonstrate Benefits

Induction Word of Mouth Communication

Services Marketing

Difference between goods and services:-

Dimensions Services Goods

Characteristics

Entity Intangible Tangible

Storage Not Possible Possible

Quality Varies with time and Person Standardized

Producer Status Inseparable from service Separate from goods

Labour Intensity Tends to be high Lower

Life Still born Longer

Marketing Planning

Demand Supply Fluctuating Stabilized

Supply Constrained Flexible

Title No Ownership Ownership possible

Seasonality Present Goods specific

Consumer reaction Spontaneous Delayed

Pricing Labour based Material Based

Need satisfied More emotional More physical

Basis of Competition Personalization Technology

Channels Shorter Longer in most cases

Repairs Impossible Possible

Replacement Rare Common

Forecasting Short run Long-run

ForecastConsumer behaviour &

arrival time

Products to place to

inventory

Image Corporate Brand

Physical Movement Of the provider Of the goods

Cost Allocation Difficult Easier

Marketing Strategy

Orientation External & Internal External

Focus Customer Expectations Customer Needs


Services Marketing

Approach Focused Can be diffused

Operations

Production Spontaneous Time-spread

Customer involvement High Low / absent

Physical presence of the

customerEssentials Hardly necessary

Physical surrounding Very important Not so important

Standardization Only for routine services All over

Facility location Close to customer Near supply

Facility designTo accommodate physical /

psychological needsTo enhance production

Product designEnvironmental plays a vital

roleOnly physical product

Process designImmediate effect on

consumersCustomer not involved

Scheduling As per customer interest Completion fates

Production planning Smoothing results in losses Possible

Inventory Personnel Raw materials

Quality control Variable standards Fixed

Quality objective Zero defection Zero defect

Worker skill Interaction Technical

Time standard Loose Tight

Capacity planning Fluctuation Average

Wage payment Time based Unit based

Type of technology Generally soft Generally hard

Delivery Along with production Separate from production

Organizations

Structure Flatter Taller

Role of higher levels Supportive Demanding

Communication Criss-cross Mainly vertical


Services Marketing

Service Marketing Mix:

Product: - Service is an intangible product. It consists of a bundle features and benefits that

have relevance to a specific target market such, there is a high level of flexibility and opportunity

to be innovative is designing a product offer.

Price: - The pricing decision is a critical one in services too, as this component of the marketing

mix alone determines the revenue of the firm. Consumer sensitivity to price would be higher in

services than in goods. Though the basic methods of pricing are the same as in goods, the

pricing strategies for services basically depends upon value perceptions of various group of

people that are targeted by the organization.

Place: - Services are intangible as well as inseparable. These two characteristics do not allow a

service firm to follow the same channel options available for goods marketing. Due to the

intangible character of service, traditional wholesalers and retailers cannot be used. As service

cannot be stored and cannot be separated from producers, retailing cannot be an independent

activity in services marketing. Production, distribution and consumption are simultaneous

activities in services. However services have an advantage of using a direct selling approach,

through which services can be offered to the customer at a lower cost.

Promotion: - Consumers are co-producers in the service business. The quality will not only

depend upon the performance of the service provider but also on the performance of the service

consumer. Very few service organizations or service concepts can have readily available mature

performers as consumers. It is the responsibility of service organizations to educate and if

necessary, train customers so as to make them prepared to use the service efficiently. A well

designed promotional programme is on immense help to organizations to inform, persuade, and

train customers to better their experiences.

People: - Service organizations are people oriented. Employees of a service firm constitute the

major competency in undertaking business operations. Every employee of the service

organization is a marketing person, who undertakes either fulltime or part time marketing

activity. Whether an employee is involved in direct contact with the customer or not, if he was

placed on the line of visibility, his behavior, activities, and performance will have a direct

influence on consumer. Service employees are to be trained and motivated for better

performance in marketing activities.


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Process: - It is a functional activity that assures service availability and quality. The way the

physical setting is designed technically and hoe the functions are scheduled and routed to provide

promised terms, the management of process is to manage service encounters (the interaction

between service employees and customers, customers and service environment, systems and

other facilities) effectively.

Physical Evidence:- Most services cannot be offered without the support of tangibles. Though

customers cannot see the service, they can definitely see the tangible associated, examine them

and try to form an opinion on the service provider. The entire physical object used as evidence

by the customer to assess and expect performance from the service provider. Physical evidence

play a critical role in shaping consumer perceptions and also expectations.

S.No Marketing Mix

1 Product

Physical good feature, quality level, accessories, packaging,

warranties, product line, branding, service lines and after

sales service

2 PriceFlexibility, Price level, Terms, Differentiation, Discounts,

Allowances, Commissions, Perceived Value

3 Place

Channel type, Exposure, Intermediaries, Outlet Locations,

Transportation, Storage, Managing Channels, Accessibility,

Coverage

4 Promotion

Promotion blend, Sales people number, selection, training,

incentives, Advertising Targets, media types, types of ads,

copy thrust, Sales promotion, Public Relations, and Publicity

5 People

Employees recruiting, training, motivation, rewards,

teamwork, Customer education training, Communicating

culture and values, Employees research, Attitudes

6 Process

Flow of activities, Standardardized, Customized, Number of

steps, simple, complex, level of customer involvement,

Policies, Procedures, Employee discretion, Customer

involvement

7 Physical Facility design, aesthetics, functionality, ambient conditions,


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evidence

Equipment, Signage, Employee dress, Reports, Business

cards, Statements, Guarantees, Furnishing, Colour, Layout,

Noise level


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UNIT – 2

Marketing Management Process:-

“Analysis, planning, implementation, and control of programmes, designed to create

build and maintain beneficial exchange with target buyers for the purpose of achieving

organizational goals”. - Philip Kotler –

Process:-

Organizing Marketing Planning:-

Developing marketing strategy requires market planning and it is usually preceded by

market analysis. By strategic planning the companies decides what it wants to achieve through

its business based on the marketing opportunities, threats and current market situations. The

marketing information can be gathered thorough marketing research and marketing intelligence.

Marketing research is a system concerned with the structured collection of market information

about marketing effectiveness – such as brand awareness or delivery performance. Marketing

intelligence comprises of the procedure and sources used by the marketing management to obtain

pertinent information about the development in the marketing environment. Marketing research

is more structured and quantifiable and marketing intelligence is more focus on intangible ideas

and trends.

Analyzing Marketing Opportunities:

It is to identify target markets and determine the changing needs of customers and their

bases for choosing among the many alternatives offered. Consumers usually have complex and


Organizing Marketing PlanningManaging Marketing Efforts

Analyzing Marketing Opportunities

Selection of Target Markets

Developing Marketing Mix

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sophisticated reasons for a choosing a particular services. So service marketers must determine

what specific needs can be satisfied by the type of service offered and what attributes of service

offering are considered most important by consumers. Marketing orientation requires

organizations to monitor their environment to adjust their offerings so that customer needs are

fulfilled.

Selecting Target Market:-

The process of identifying and evaluating marketing opportunities gives rise to the

Segmenting, Targeting and Positioning of services to the consumers. Basically services are

heterogeneous. Because of that different consumers may perceive the same service quite

differently. So marketers segment the total market into smaller target markets that are

characterize by more homogenous needs.

Once the segmented groups are analyzed, the service firm then focuses on meeting the

specific needs of one or more segments. The target market is selected by the service firm after

considering the following criteria.

1) Profitable 2) Viable 3) Accessible 4) Large enough

Positioning is an efforts taken by the service firms to develop a clear image of its services

in the minds of the customers and then to communicate this image to buyers in comparison with

their notions or images with other services.

Developing Service Marketing Mix:-

The marketing mix of services is like that for tangible products, consists of product

planning and development, pricing, promotional activities and channels of distribution and due to

its special and unique features, the marketing mix is extended to include physical evidence,

process and people.

Managing and Controlling Marketing Effort:-

In service firms large number of staff interacts with the customers in the delivery process.

So service firm must mobilize its people willingness and enthusiastic participation and resources

within the organization to put the strategic plan to work. Marketing function in the service firm

cannot be isolated from the other management activities. Heskett lays out a link of activities that


Services Marketing

emphasis on the interrelation of various activities of the organization. These are summarized as

follows:

1) Customer loyalty drives profitability and growth

2) Customer satisfaction drives customer loyalty

3) Value drives customer satisfaction

4) Employee productivity drives value

5) Employee loyalty drives productivity

6) Employee satisfaction drives loyalty

7) Internal quality drives employee satisfaction

8) Top management leadership underlies the chain success

Service are heterogeneous in nature it is difficult to evaluate and control the service

performance. So they require (a) to minimse performance variability by motivating service

providers and (b) to obtain feedback from customers regarding their satisfaction with the service

providers, which helps to evaluate and control the performance.

Strategies to control service performance is to by establish clear standard for

performance, defining goals for service personnel and specifying the means to attain these goals.

Control system must have at least three different form of control.

1) Performance Control, (2) Profitability Control and (3) Strategic control.

Consumer Behavior:-

Marketing activities are directed towards the consumers. The ultimate success of all

economic activities depends on producing what the buyer consider suitable. The buyers had

some freedom of choice of accepting or rejecting the service of the seller. They purchase

services based on their mental and economic forces. The mental forces creates desires and wants

to satisfy pride, fear, love, fashion, etc., and economic forces which may decide the buying

pattern to choose between those wants and select according to priority of consumption. Thus the

marketer’s prime task is to find what, when, where, how and from whom the consumers decide

to purchase services. So understanding the consumer behavior is must.

There are many factors that influence consumer behavior. Potential customers are

subject to various stimuli. The service firm must understand how the consumer would respond


Ideal Service

Desired Service

Adequate service

Predicted Service

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to different service feature, rice, appeals, etc along with the major forces in the marketing

environment. All these stimuli influence the buyer’s decision making process and evoke positive

or negative responses towards the services. This model of consumer behavior is called as the

stimulus response model.

Buyers Characteristics:-

a) Cultural Factors, b) Social Factors, c) Personal Factor, and d) Psychological factor

Buyer Decision Making process:-

a) Problem recognition, b) Information Search, c) Evaluation of alternatives, d) Purchase of

service and e) Post purchase decision.

Model of Customer Expectations

Customer expectations are pretrial beliefs a consumer has about the performance of a

service that are used as the standard or reference against which service performance is judged.

Customer expectations consist of five levels: ideal service level, desired service level, adequate

service level, predicted service level, and zone of tolerance.

Zone of Tolerance

Ideal Service: - Consumer’s wished for level of services

Desired Services: - Level of performance customers want or hope to receive from a service


StimuliMarketing Other

7 – Ps Economic Technology Cultural Political

Buyer’s Black Box

Buyer BuyersCharacteris- Decisiontics Making

Process

Buyer’s Response

Service ChoiceDealer ChoicePurchase timing

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Adequate Service Level: - Minimum level of service a consumer will tolerate and accept

without being dissatisfied

Zone of tolerance: - Area between the adequate level of service and the desired level of service

Predicted service level: - Level of service consumer actually except from the service firm.

Antecedents of Customer expectations:-

Consumer expectations are influence by internal, external, situation and firm produced

factors.

Internal Factors:-

Personal Needs:- Every human being is having a need and they are also consider as hunting

animal. Because if he is satisfied on his basic need then he has some superior need and he try to

strive that. Maslow hierarch of needs model clearly explained this concept. He identifies the

hierarchy of needs; they are physiological needs, safety needs, social belongingness needs, self-

esteem needs, and self-actualization.

Level of involvement:- Consumer’s level of involvement with the service is influencing their

expectations. It has two effects on expectations. First as the level of involvement increases, the

gap between the ideal level of service and the desired level of service narrows. Second, as the

level of involvement increases, the zone of tolerance decreases. Consumers are less tolerant

when a service is less than ideal.

Past Experience:- It includes experience with a particular service vendor, experience with other

vendors within the same industry, and experience with related services.

Service Philosophy:- Personal philosophy concerning the delivery of services is also influencing

expectations. It may be nature, high standards, concerning the quality of service delivery and

very little tolerance for deviations. Other consumers have lower standards and tend to be more

tolerant of service deviations.

External Factors:-

The three external factors that affect consumer expectations are competitive options,

social context, and word – of – mouth communications. These factors can have an impact on all

four levels of expectations


Services Marketing

Competitive options:- Consumer expectation from a particular service vendor is impacted by the

alternatives available to the consumer. In many cases, expectations of services will not only be

affected by other vendors in the same industry but by what is available in other service

industries.

Social Context:- Consumer’s social situation can have an impact on his or her expectations of

service. People’s desired level of expectations will often increase when they are with others who

are important to them, while their zone of tolerance is normally reduced.

Word of mouth communication:- It is the strongest source of information used by consumers in

forming expectations. Consumers will often seek the opinion of others before purchasing a

service. Word of mouth communication can come from three sources; personal sources, expert

sources, and derived sources and is used to solidify or establish the predicted level of service.

For services with which consumers have little knowledge or experience, word of mouth

communication can be used to establish can be used their desired and ideal levels of service.

Personal sources include friends, relatives and work associates

Expert sources are sometimes sought out, especially for high involvement purchases. Consumers

often believe experts will provide better information than personal sources.

Derived sources are third-party sources

Situational Factors:-

Situational factors such as reason for purchase, consumer’s mood, weather, time

constraints and whether the service is an emergency are influence the consumer expectations.

These are temporary changes in the normal state of things.

Firm Produced Factors:-

Firm produced factors such as promotions, price, distribution, service personnel, tangible

cues, other customers, firm image, and pre-service waiting.

Managing customer Expectations:-

As noted previously, patronage decisions are based on consumer expectations. The

expectations are high then probability of purchase is high. The expectations are low then

probability of purchase is low. Also remember that the expectations are high, and then there is a

greater chance that the service firm will not be able to meet consumer expectation and that the

customer will be dissatisfied. The reverse is true for lower expectations.


Services Marketing

Service firm face this strange dilemma. Promoting high expectations will increase

patronage but also increase the chances of producing dissatisfied customers. Promoting lower

expectations will ensure satisfied customers, but the chances of getting customers to buy the

service are greatly reduced. Therefore, the ideal goal is to promote the exact service customers

expect. If firms can match expectations and service customers are satisfied.

Managing customer expectations is a critical component in the marketing plan of a

service business. Consumer expectations must be managed during the pre-purchase phase, the

service encounter, and the post-purchase phase.

During pre-purchase phase:-

Service providers learn what customer expects, tell customers what they can expect, and

consistently provide the service that customers expect.

During service encounter:-

Three strategies can be used for managing customer expectations. They are service

personnel must communicate with the customer during the service encounter, if possible, service

provides should modify the service to meet the customer’s expectations, and if the service cannot

be modified, the service personnel should explain why the customer’s expectations cannot be

met. The goal during this phase is to ensure the service being provided matches the consumer

expectations.

During the post purchase phase:-

Managing consumer expectations does not stop after the service is performed. Service

firms have three strategies they can use after the service has been completed. First, companies

should communicate with customers immediately after the service is completed to see if

expectations were met. Second, firms can use a follow-up program, such as an evaluation survey

sent to the customer through the mail or a phone call. Third, companies should have a procedure

for dealing with customer who is not satisfied with the service that will assist in managing future

expectations. The goal during this phase is two fold. The primarily goal is to communicate with

customers to see if expectations were met. The secondary goal is to modify future expectations

to increase the chances of repeat purchases.

Market Segmentation:-

It is process of dividing the total market for good or service into several smaller groups. It

is an element of marketing strategy, recognizes the wisdom of specializing to suit the needs of a


Services Marketing

segment of the market rather than trying to do “all things t all people”. The purpose of

segmentation is trying to identify specific user group / groups then pursue it with the tailored

products or services supported by appropriate marketing mix strategies.

At one extreme, service firms historically those with a relatively small number of

customers; each of whoms is vitally important treat customers as individuals and develop

individual marketing plans for each customer. At other extreme, some service firms offer one

service to all potential customers as if their expectations, needs, preferences were homogeneous.

Between these two extremes are options that most service marketers choose – offering different

services to different groups of customers. To do this effectively, companies need market

segmentation and targeting.

Process for Market Segmentation and Targeting in Services:-

1. Identify bases for segmenting market:- Market segments are formed by grouping customer

who share common characteristics that are in some way meaningful to the design, delivery,

promotion or pricing of the services. Common segmentation bases for consumer markets are

demographic segmentation, geographic segmentation, psychographic segmentation, behavioral

segmentation and techno graphic segmentation.

2. Develop profiles of resulting segments:- Once the segments have been identified it is critical

to develop profiles of them. In consumer markets these profiles usually involve demographic

characteristics or psychographic segments. Of most importance in this stage clearly understands

how and whether the segments differ from each other in terms of their profiles. If they are not

different form each other, the benefits to be derived from segmentation, that is, from more

precisely identifying sets of customers, will not be realized.

3. Develop Measure of segment attractiveness:- The fact that segments of customers exist does

not justify a firm’s choice of them as targets. Segments must be evaluated in terms of their

attractiveness, size and purchasing power of the segments, worth of investment in marketing and

relationship cost associated with the group, accessibility, and availability of marketing vehicle to

reach targeted customers.

4. Select Target Segments:- Based in part on the evaluation criteria the service marketers will

select the target segments for the service. The must decide if the segment is large enough and

trending toward growth. Market size will be estimated and demand forecasts completed to

determine whether the segment provides strong potential. Competitive analysis, including an


Services Marketing

evaluation of current and potential competitors, substitute products and services, and relative

power of buyers and suppliers, will also help in the final selection of the target segments. Finally

the firm must decide whether serving the segment is consistent with company objectives and

resources.

5. Ensure that segments are compatible:- Services are often performed in the presence of the

customer, the services marketers must be certain that the customers are compatible with each

other. If during the non peak season a hotel chooses to serve two segments that are incompatible

with each other. For example families who are attracted by the discounted prices and college

students on their summer break it may find that the two groups do not merge well and lead to

negatively influence each others experience and hurting the hotels future business. In identifying

segments it is thus important to think through how they will use the service and whether

segments will be compatible.

Basis for Segmentation:-

1) Geographic segmentation:- Divides consumer on the basis of countries, regions, states,

cities and towns.

2) Demographic segmentation:- It is the study of people in the aggregate, including

population size, age, sex income, occupation and family life cycle.

3) Psychographic segmentation:- It is a technique that classifies life style by investigating

how people live, what interests them and what they like. It is also called as style analysis.

It is otherwise known as dividing market into segments on the basis of consumer life

styles, social class, or personality profile.

4) Volume segmentation:- Classification of consumers based on usage rate, usage expenses

and brand loyalty.

5) Benefit Segmentation:- It is the process of grouping consumers into market segment on

the basis of different benefits sought from the product.

Approaches to Target Market:

Undifferentiated Marketing:- A company’s attempt to appeal to the whole market with a single

basic marketing strategy intended to have a mass appeal. It is other wise known as mass

marketing


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Differentiated Marketing:- A company’s attempt to appeal to two or more well defined market

segments with a marketing strategy tailored to each segment.

Concentrated Marketing:- A company’s attempt to appeal to one well-defined market segment

with one tailor made marketing strategy.

Target Market Approaches A Comparison


Services Marketing

Unit - 3Service Quality:

The evolution of quality concepts and movement had been the subject of operational

managers in the manufacturing industry. Recently, quality has gained relevance in context of

service industry with reference to customer needs and expectations. The importance of quality is

recognized every where the concept seems to refer to several different areas, namely, quality of

the product, quality of the process, quality of the delivery system and quality as a general

philosophy of the organsation.

Quality is a difficult concept to define in a single definition. Quality can be viewed from two

points of view:

2. From the point of the service provider – to set up standards or specifications in the

manufacturing process as well as the output which is totally objective and technical in

nature?

3. From the point of view of the customer – service quality occurs only when the service

firm provides services to the specifications that satisfy their needs. The idea of quality

here is subjective and will be strongly linked to the needs and expectations of the

customer.

The process used by consumers in evaluating services differs from the process used for

goods. Services tend to be high in experience and credence qualities while goods tend to be

high search qualities.

Search Qualities:- Attributes that consumers can evaluate prior to purchasing a service

Experience Qualities:- Attributes that consumers can evaluate only during or after the

consumption process

Credence Qualities:- Attributes that consumers have difficulty to evaluate even after the

consumption is complete.

Quality Definition Examples

Search Can be evaluated prior to purchaseLawn mover, water service

for automobiles


Services Marketing

Experience Can be evaluated only after purchase Food, entertainment

Credence Difficult to evaluate even after the service Funeral service, Education

Service Quality Dimensions:

Berry, Parasuram, and Zeithaml conducted extensive research in service quality and

identified 10 dimensions used by consumers

Dimensions Definition Examples

TangiblesAppearance of physical, facilities,

equipment, personnel and communication

Are the bank facilities

attractive?

ReliabilityAbility to perform the promised service

dependably and accurately

Is my credit card statement

free of errors?

ResponsivenessWillingness to help customers and

provide prompt service

Is my stock broker willing

to answer my question?

CompetencePossession of the required skills and

knowledge to perform the service

Does the repair person

appear to know what he is

doing?

CourtesyPoliteness respect consideration and

friendliness of contact personnel

Does my broker refrain

from acting busy?

CredibilityTrust worthiness, believability, honest of

the service provider

Does the bank have a good

reputation?

Security Freedom from danger, risk or doubtA hotel providing safes for

expensive items

Access Approachability and ease of contact

Is the repair service

facility conveniently

located?

CommunicationKeeping customers informed in language

they can understand and listening them

Does my broker avoid

using technical jargon

Understanding Making the effort to know customers and Is the repair firm willing to

be flexible enough to


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the customer their needsaccommodate my

schedule?

In their subsequent research they found a high degree of correlation between most of

these variables and consolidated them into five broad dimensions. (RATER)

1. Reliability - Ability to perform the promised service dependably and

Accurately

2. Assurance - Knowledge and accuracy of employees and their ability to covey

trust and confidence

3. Tangibles - Appearance of physical facilities, equipments, personnel ad

communication material

4. Empathy - Caring, individualized attention the firm provides its customers

5. Responsiveness - Willingness to help customer and provide prompt service

GAP Analysis:

In 1985, Parasuram, Zeithaml, and Berry developed a model of service quality. Their

model claims that the consumer evaluates service quality experience as the outcome of the gap

between expected and perceived quality. The model emphasizes n the key requirement s for a

service provider delivering the expected service quality.

The model identifies five gaps that can cause unsuccessful service delivery. By learning

the flow of the model, it is possible to exercise greater management control over the consumer

relationships. The study of this model should lead to an improved realization of the key issues at

which service providers can influence the satisfaction of consumers.


Word of mouth communications

Personal Needs Past Experience

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Gap 5

Consumer

Marketer GAP4

Gap1

Gap 3

Gap 2

Gap – 1 ( Gap between customers expectation and management perceptions)

Causes of Gap Strategies to reduce gap

Failure of management to identify

consumer expectations

Communicate with customers

Conduct market research

Encourage upward communication

Decrease layers of management

Gap – 2 ( Gap between management perceptions and service quality specification)


Resource constraints

Market conditions

Management indifference

Top management commitment

Develop service quality goals

Standardization of tasks

Address feasibility of customer expectation

Gap – 3 ( Gap between service quality specification and service delivery)



Expected service

Perceived services

Management perceptions of consumer exceptions

Translation of perceptions into service quality specification

Service Delivery(Including pre and post contracts

External Communication to consumers

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Employees unaware of specifications

Employees do not have skills to perform

specification

Employees unwilling to perform according

to specifications

Enhance team work

Ensure employee job fit

Ensure technology job fit

Provide employees with perceived control

Develop a supervisory control system

Reduce role conflict

Reduce role ambiguity

Gap – 4 ( Gap between service delivery and external communication)


Poor or lack of communication

Over promising

Increase horizontal communication

Avoid propensity to over promise

Gap – 5 ( Gap between expected quality and perceived quality)


Perceived quality by the customer depends

on the nature of gaps associated with the

delivery of service quality by the firm

By bridging the gaps 1to 4

Unit – 4People:-


Services Marketing

In organization manufacturing tangible foods, the personnel perform their duties in the

factories, away from customers. In services, personnel come in contact with the customers in the

process of production and consumption of services. The inseparable nature of service

emphasizes the point that the human element forms an important aspect in the service industry.

According to some authors “people”, the fifth element in the service marketing mix applies not

only to personnel but it recognizes the role of the participants both employees and customers in

the service delivery process. But, as we look at a marketing mix variable as controllable

element, we deal with management of people within the organization as a key task. They are

particularly important in those situations where, in the absence of clues from tangible products

the customer will form an impression of the organization from the behavior and attitudes of its

staff.

In service business, the service personnel reflect the organizational realities, it is through

the interaction with the staff, and the customer forms an opinion of the organization. A service

firm may have all equipment and technical facilities, and yet may not able to provide satisfactory

customer service. This may be due to the lack of interpersonal relationship between the service

provider and customer. In such cases, the customer develops negative attitude towards the firm.

Therefore, service marketers need to develop a high level of interpersonal skills and customer

oriented attitude in employees. According to Zeithaml and Bittner “the service employees are –

the service, the organization in the eyes of the customer and they are the marketer”.

Role of Service Personnel:-

Service employees can be divided into two categories: support personnel and customer

contact personnel. Support personnel are seldom seen by the customer. The quality of the

technical component of service quality is primarily determined by support personnel because

they are generally the ones performing the service.

Customer contact employees are the interface between the service organization and its

customers. These employees are the ones customers see and the ones with whom they interact.

The quality of the functional component of service quality is primarily determined by customer

contact employees because they are more aware of the customer’s needs and wants.

Unfortunately, many service businesses do not understand the value of their employees.

Often they are thought of as mindless robots and disposable components of the operation rather


Services Marketing

than as actual human resources. Many are paid at or near minimum wage, with a large

percentage earning less than the poverty level for a family of four. Many service employees

have not type of health insurance and are asked to perform monotonous, standardized robotic-

type jobs. Despite these adverse working conditions, companies expect these employees to work

hard and serve their customers with a smile. It is not surprising under these circumstances to see

annual turnover rates in some service industries of 100% or more.

An organization with a high turnover rate not only experiences the direct costs of

recruiting and training new employees, the organization also bears indirect costs and

consequences, such as disruption of the employee team with whom the departing employee was

working. It disrupts the establishment’s productivity because the new employee will need time

to reach the productivity level of the former employee. Most important, customer do not receive

the service that is expected because either new employee doesn’t know what should be done or

the employee who is planning to quit doesn’t care. In the end, the indirect costs in terms of lost

customers and lower productivity are greater than any direct monetary costs encountered.

Service firms must recognize these problems and they must take intensive efforts while

hiring personnel for their organization. The hiring practices based on the job characteristics,

control issue, conflict, stress and etc.,

Job Characteristics:-

Customer contact employees in the service industry serve in a boundary spanning role or

a role of linking an organization or business with its environment thorough interaction between

members of the organization and members of the environment. Support personnel to be

motivated to perform consistent, high quality work for the success of the service firms.

In designing service jobs, firms must be aware of five important motivational job

characteristics. These characteristics are.,

Skill Variety: - Degree or range of abilities required by an employee to do a job

Task identity: - Degree that a job has identifiable units of work with visible outcomes

Task significance: - Degree of impact an employee perceives his or her job has on the lives of

others inside or outside of the organization

Autonomy: - Degree of freedom and discretion an employee has in his or her work design


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Feedback: - Degree of direct clear information an employee receives from superiors concerning

the effectiveness of his or her performance.

Empathy: - Ability of an employee to identify with the feelings or thoughts of another employee

or customer.

Control Issue:-

A critical element in the customer contact position is the issue of control. Individuals

want control over their and the things that happen to them. Within the service setting, customers

must surrender some control of their lives in order for the service to be performed. Purchasing of

nonprofessional services requires customers to surrender some control during the service

encounter, although usually not as much. To perform the service properly, customer contact

personnel would like to have maximum control. To ensure they get the service they want,

customers want to keep as much control as they can. In addition to these two participants in the

service setting, the firm has an interest in how the service is performed. To ensure the

employees perform the service properly, the firm would like to control the service situation. By

controlling the service encounter, the firm can increase productivity of employees and the cost

efficiency of its operation. The result is a three-way fight for control.

The dominant party in this struggle for control is partly determined by the operational

position of the service business. Firms using the cost efficiency approach will attempt to

dominate the service encounter in order to control costs. Firms using the functional service

quality approach tend to give the most control to the customer contact person, enabling that

individual to build a relationship with the customer. Firms using the technical service quality

approach tend to place the most control in the hands of the support personnel who perform the

service. Customers and employees of firms using the customization approach tend to share

control.

Increasing firm and service personnel control:-

Firms and service personnel must have some control of a service encounter to ensure the

service is performed properly. As already stated the amount of control desired is determined by

the firms’ operational position. The method firms and service employees use to gain control of

the service encounter are physical control, control through leadership, control through rewards,

and educating the customers.


Services Marketing

Increasing customer Control:-

Customers do not like surrendering control of their lives, even in service situations. The

more control customers are forced to surrender to either the service firm or the service personnel,

the greater the probability that the customer will be dissatisfied with the service experience. Yet,

to perform a service, customers must surrender some control. To solve this dilemma, firms

should find ways of increasing a customers’ perceived control, they are more willing to give up

actual control and are more satisfied with the service.

Service firms have two methods of increasing perceived control: behavioral control and

cognitive control.

Behavioral control: - when customers are given the ability to change, modify, or choose how

service will be performed.

Cognitive control: - Belief by customers that they have some control over the service encounter

because of knowledge they have obtained.

Dealing with Conflicts:-

Conflicts among people will occur more service sector than in manufacturing sector

because of labour intensive. An increase in conflict results in increased employees stress. It may

leads to increase employee health problems and absenteeism. A corresponding decline in

productivity and efficiency can also occur. Because of the boundary-spanning role of customer

contact personnel, their position by its very nature is high in conflict.

Types of Conflict:-

Service firms deal with seven different types of conflict. Three types of conflict occur

with employees, three occur with customer and one between customers and employees.

Employee conflict:

Type of Conflict Causes of Conflict Methods for Reducing conflicts

Employee – role conflicts

1. Inequality dilemma2. Dress Code

1.Screen applications carefully2. Provide instruction and training3. Have procedure for employees to complain

Employee organization conflicts

Two boss dilemma 1. Make sure employees understood policies and goals of the firms

2.Empower employees3. Management should train employees in


Services Marketing

decision making4.Management Should support the decision of employees5. Develop job descriptions for each employee and assign tasks fairly

Employee – employee conflicts

1.Lack of clear communication .2. Lack of designated Chain of command3. Conflict of personalities4. Competition among employees for customersDifference in perceived workloads

1.Clearly communicate to each employee his or her responbilities2. Clearly designate a chain-of-command and be sure it is followed3. Transfer employees whose personalities seem to clash4. Develop a policy for dealing with customers to avoid competing for the same customer.

Employee

– customer

conflicts

1.Either the employee or customer does not follow their expected role2.Mistreatement, misuse or perceived invasion of an employees workforce3. Either the employee or customer does not have behave in a proper or accepted way4. Either employee or customer does not follow the expected or perceived script

1. Train employees in respect to their expected role and script2. Train employees to respect customers and to understand the customer needs to utilize the service facility3. Train employees on how to deal with difficult customers and customer behavioral problems.4. Teach and instruct customers concerning their role in the service and their expected script

Customer Conflicts:-

Type of Conflict Causes of Conflict Methods for Reducing conflicts

Customer – role conflicts

Lack of understanding of their role in the service

1. Provide instruction to customers concerning their role in the service.2. Be empathetic to customers when they do not follow their prescribed role

Customer organization conflicts

Customers disagree with policies and rules of the organization

1.Explain clearly to the customer the rule or policy that is of concern2. Negotiate an equitable settlement with the customer that will not create a major conflict with organizational policies.3. Analyze policies to see if they are fair, out-dated, or need to be changed

Customer – 1.Customers disregard the 1.Train employees in how to deal with


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Customer conflicts

feelings and presence of other customers2. Customer have different expectations from the service provider3. Customer expect different or special treatment from service personnel in the presence of other customers4. Customers are rude toward other customers

customer conflicts2. Separate customers that may conflict with each other3. Treat all customers fairly and the same. If a customer is treated differently, explain to other customers affected why the different treatment.4. Teach customers what to except so all the customers have the same expectations

Employee Customer conflicts:-

Conflicts handle by employees and customers

Customer Employee

Avoidance is displayed by patronizing

another service firm

Avoidance is displayed when the employee

avoids the source of the conflict.

Sometimes this avoidance behavior will be

absenteeism

Retaliation is displayed by spreading

negative word-of-mouth communications

about the firm

Psychological withdrawal occurs when the

employee continues to work, but mentally

disengages from the tasks involved

Direct confrontation occurs when the

customer confronts an employee or

manager of the firm about the service

experience requesting a resolution

Direct confrontation occurs when the

employee directly confronts the conflict

and strives to either resolve, reduce, or

eliminate the conflict

Psychological withdrawal occurs when the

customer continues to patronize the firm,

but is mentally disconnected.

Retaliation occurs when the employee

decides to get even by retaliating against

the firm in some way. Seldom is this form

of dealing with conflict used.

Service Process:-

The service process refers to how a service is provided or delivered to a customer.

Designing a service delivery system is a creative process. Process is the way of undertaking

transaction, supplying information and providing services on a way which is acceptable is the


Services Marketing

consumer and effective to the organization. It begins with a service concept and strategy to

provide a service with features to differentiate it from the competition. Designing the service

process system involves issues such as location, facility design and layout for effective customer

and work flow, procedures and job definitions for service providers, measure to ensure service

quality, extent of customer involvement, equipment selection and adequate service capacity.

Factors to be considered in the service process design and implementation:-

1.Service Itself:-Identify the service is depend on process or equipments. Identify the service is

having highly intangible attributes or depend on process.

2. Customer Participation:- For most service systems the customer is present when the service

is being performed. Customer participation can increase the degree of customization. Involving

the customer in the service process can support a competitive strategy of cost leadership with

limited customization, if focused on a self customer market. Depending on the degree of

customer involvement a spectrum of service delivery system is possible, from self-service to

complete dependence on a service provider.

3. Degree of customer contact:- Customer contact refers to the physical presence of the

customer in the system. Degree of customer contact can be measured by the percentage of time

the customer is in the system relative to the total service time. In the high contact services, the

customer determines the timing of demand and the nature of the services by direct participation

in the process. The perceived quality of service is determined to a large extent by the customer’s

experience.

4. Degree of Divergence:- A standardized service is designed for high volumes with a narrowly

defined and focused service. The tasks are routine and require a workforce with relatively low

levels of technical skills. For customized services more flexibility and judgment are required to

perform the tasks. In addition more information is exchanged between the customer and service

worker.

5. Location of service delivery:- Service delivery process be located at the service providers

premises or should be process carried out at the customer place. Services that generally require

the customer to come to the supplier have a greater opportunity to control the delivery

experience.


Services Marketing

6. Complexity of service:- It reflects the number of steps involved in delivering the service.

Whether the service is high or low in complexity and in divergence can be readily determined by

looking at its blue print.

Spectrum of service processes:-

Much as we have thought of manufacturing enterprises in terms of different kinds of

production processes, we can also think of service operations in terms of distinct processes.

With the help of a matrix that contrasts the labour intensity of the process on one hand with the

degree of interaction with customization of the service for the consumer on the other, as shown

in figure 13.1, we can roughly define four reasonably distinct service processes.

Service design Options:-

The service design options are determined by the existence and combination of the

following concepts.

Input uncertainty:- It refers to the service organization’s incomplete knowledge of what

the customer is going to bring to the service and how he is likely to behave during the

service encounter.

Customer Willingness to participate:- It refers to ow far customers wish to play an

active part in service. Customers capacity to become involved can be limited by lack of

knowledge, skills and understand their role.

Diversity of demands:- It refers to the uniqueness of customers demands

Interdependencies: - It refers to different patterns with respect to division of service

work and customization versus and standardization of service actions and

interdependencies.


Services Marketing

Sequential standardized service design:- A customer dominated design in which they

serve themselves after service employees have provided the goods and facilities needed

for self service. It is standardized service in which the front and back office can be

decoupled to allow for efficient delivery of service.

Reciprocal service design:- Joint participation of the parties in which the output of each

becomes the input for the others. The service is produced largely on the basis of

significant interactions between front office employees and customers.

Sequential customized service design:- The bulk of the work here is performed by the

service employees in a system of strong interdependence between back and front office.

Pooled service design:- Most of the work is done by an efficient back office, largely

decoupled from front office disturbances. Customers do not interact extensively with

service employees but engage in the sharing of resources that makes mass service

possible.

Service Process Planning:-

1. Basic technological decision

2. Conversion / material decision

3. Specific equipment decision

4. Process flow design

Blue prints

Flow Charts

Front office / Back office

Layouts

Bench marks

5. People decision

Distribution:

Delivery of services differs significantly from that of the manufactured goods. The

production of goods is followed by distribution whereas services usually cannot be separated

form the service provider. Because of this inseparability characteristic the channels for most

service are short and simple.


Services Marketing

The distribution system may be defined as the channels, or means used by which the

service provider gains access to potential buyer of the service product. It involves availability

and accessibility of a service to consumers.

Before the formulation of channel structure following aspects of service distribution must

be taken into consideration

There is no actual tangible product which is being distributed

It involves consumers’ movement to the service location. As consumer is part of the

service operation, the method of selling and environment within which service product

purchase is made becomes part of service experience.

The intermediaries / agents play a key role in recommending services to consumers

The service organizations have to devise promotional / distribution strategies suiting

customer coming directly, through agents or other modes.

Service locations:-

Identify the location for the delivery of service is a critical decision. Such decision will

be influence by many factors. The target consumers, the degree of interaction required with

them and accessibility are the major influencing factors. While selecting a location for service

outlets, the following factors are to be considered;

Proximity:- The location of the service outlet should be as close to the target market as possible.

The proximity of the service outlet saves timer and energy costs and also develops affinity

among the consumers.

Image:- The image of the location should match the corporate image of the service company.

The level of acceptability of a location by the consumer varies.

Parking Facilities:- It is becoming an important location factor, particularly in cities and metros.

Convenience:- The location of the service outlet should be convenient for customers.

Convenience is often measured in terms of public transport, safety, security and so on.

Accessibility to other services:- A service outlet requires a host to other services and

infrastructural facilities such as electricity, telecommunications, water and sanitation

Competitive advantage:- The effect of the competition cannot be ignored while taking any

decision in services. The location that provides competitive advantage can be preferred.

Channel Structures:-


Services Marketing

The means used by businesses to reach their customers are known as channels and the

length of a channel varies for different business.

1. Direct Channel – Distribution channel from producer to consumer with no intermediaries

2. Indirect Channel – Distribution channel from producer to consumer using agents or

intermediaries to assist in the delivery of the service

Channel Option:-

1. Exclusive distribution – Use of a limited number of agents or outlets that carry only one

brand

2. Selective Distribution – Use of a few intermediaries but not all who would like to carry a

particular brand

3. Intensive Distribution – Placing a service with as many different agents or third parties as

possible.

Multi Channel Systems:-

To increase market coverage, many service firms are using a multichannel approach.

Multi channel distribution involves the use of two or more channels to reach one or more market

segments. In addition to increasing market coverage, this strategy often lowers costs of

distribution.

Distribution Growth Options:-

Service firms have seven distribution growth strategies available to them. The three

primary options are multi-site, multi service and multi segment.

Multi-site:- Expansion of ser vice to another location

Multi-service:- Addition of a new service to a firm’s existing service portfolio.

Multi-segment:- Expansion of a current service to a new market segment


Services Marketing

Internationalization:-

Now we are in globalize environment. So each and every organization wants to sole their

products or service in the global market. To be successful in the global market the firm must see

the world as a market made up of many submarkets with different needs and social cultures. The

most successful companies are those that identify a potential market early by identifying unfilled

needs and looking for ways to meet them.

Methods of International Expansion:-

Expanding internationally can be done in one of six ways.

1. Direct Exporting:- Service firm uses domestic resources to perform a service in another

country.

2. Joint Venture:- Entity formed by a merger of a domestic firm and a firm from another

country,


Services Marketing

3. Direct Foreign Investment:- Firm building and operating a facility in another country.

4. Agents:- Appoint agents in other countries to sell their services

5. Franchises:- Service firm may offer franchises in other counties to sell their services

6. License agreements:- Local firms are given a license to ell and provide the service.

Intermediaries:-

Agents: - An agent is who acts on behalf of the principal and has the authority to create a

legal relationship between the customer and the service principal. The agent receives a

commission or a fixed fee for the service done by him. They normally have a longer

relationship with the service principal.

Brokers: - They normally bring the service provider and the customer together for which

they are paid a commission. They have shorter relationship with the buyer and the seller, as

their activities are transaction based.

Advantages of using agents and brokers:

1. Close to customers

2. Special skills

3. Wider coverage

4. Wider choice

5. Selling and distribution costs are reduced

Disadvantages of using agents and brokers:

1. Loss of control for the service firm

2. Service principals depend on intermediaries to deliver service according to their

specifications

3. Unless the service provider ensures that the intermediary goals, incentives and motives

are consistent with their own, they lose control over the service encounter between the

customer and the intermediary.

Franchising:-

Franchising is a method of expanding rapidly with low capital investments. It is a multi-

site distribution growth strategy involving the selling of a service concept to a third party

who agrees to establish and operate a service facility according to a franchiser’s

specifications. Most franchise contracts allow the franchiser to maintain tight controls over


Services Marketing

the franchisees’ operation. The franchise facility normally has to be designed according to

franchisee guidelines or may even be owned by the franchiser.

The essence of the franchising concept can be highlighted as follows;

It is a contractual relationship

The franchiser has a responsibility of introducing the franchisee to all relevant areas

in the operation of the business

The franchiser owns a trade name, format and procedure

The franchisee must own his own business

Elements of Franchisee Agreements:-

1. Nature of service to be supplied by the franchisee

2. Geographical territory in which the franchisee can offer the service

3. Percentage of revenue from the service to be paid to the franchiser.

4. Length of the franchisee agreement

5. Initial investment of the franchisee

6. Agreement relating to price, reliability of service promotion

7. Technical and administrative support provided by the franchiser

8. An undertaking that the franchises will not deal with competitor services.

Advantages:

Franchiser Franchisee

Wider distribution Obtained established business

Maintains consistency in quality Reduction of risk

Knowledge of local market Training

Risk Sharing

Offers expert assistanceMotivation

Additional income

Capital for growth

Disadvantages:

Franchiser Franchisee


Services Marketing

Profit have to shareLower in profit due to payment franchise

fee

Difficult to control level of service quality Lack of freedom

Difficult to control franchise imageOperation standards dictated by the

franchiser

Inconsistent quality Uncertainty

Electronic Channels:-

In the last decade, number of technological advances has taken place due to immense use

of EDI (Electronic Data Interchange). These advances have led to:

Increased use of self service operations

Providing data bank services

Electronic banking

E-mail and many more

Distribution of service through electronic channel is without any direct human interaction

because services are distributed through a service distribution system. This channel requires a

pre-designed service and a system to deliver it. Delivery of services though alternate channels,

like ATMs, Call Centre, Internet and Kiosks is growing at an ever increasing pace.

Advantages of Electronic Channels:-

1. Convenience

2. Low cost

3. Wide distribution

4. Customer choice

5. Quality control

Integrated communication:-

To successfully market a service, organizations must have a fully integrated

communications programme. Communications within the marketing context involves informing,

persuading and influencing consumer behavior. An Integrated communications program is the

coordinated use of the various communication mediums to accomplish is central objective.


Services Marketing

Communications include the promotional options of advertising, sales promotions, and personal

selling.

Communication Process:-

The key process underlying the promotion mix is communication, therefore to understand

how the promotions mix influences customers, it is necessary to understand the nature of the

communication process. The communication process shown in the following figure.

Steps in Effective Communication:-

1) Identify the target audience:- All communications must be directed at specific target

audience. The audience could be potential buyers of the company’s services, current users,

deciders or influencers. The target audience will critically influence the communicator’s

decision on what to say, how to say it, when to say it, where to say it, and to whom to say it.

2) Determine communication objectives:- All communication seeks to persuade to think, fell or

act in a particular way in their relationship with a brand. The objective should, logically, be

stated in those terms. The stages of relationship between consumer and brand, and the steps

takes to arrive at a purchase decision have been mapped in various easy over the years. The

combinations of emotional and rational elements in buying elements in a buying decision,

combined with extensive external pressures mean that any purchase decision is very complex

and that each is probably unique. R.H.Colley in early 1960 suggested an approach Called

DAMAR approach. It means Designing Advertising Goals and Measuring Advertising

Results. It serves as a example of what are generally agreed to be the main elements of the

consumer decision making process

3) Designing the message:- After defining the desired audience response, the communicator

movers to developing an effective message. Ideally should gain attention, hold interest,

arouse desire and elicit action leading to satisfaction (AIDAS Model). Formulating the


Sender Encoding Media Decoding Receiver

Feedback Response

Services Marketing

message will require solving four problems, what to say (Message content) how to say it

logically (Message structure), how to say it symbolically (Message Format), and who should

say it (Message source).

4) Selecting the communication Channel:- It is necessary to select efficient channels of

communication to carry the message. Communication channels are of two broad types,

personal and non personal.

Personal Communication Channels involve two or more persons communicating directly

with each other.

Non personal communication channels carry messages without personal contact or

interaction.

5) Determining the total promotion budget:- Promotion expenditure could become a drain on

an organization’s resources if no conscious attempt is made to determine an appropriate

budget and to ensure that expenditure is kept within it. Number methods are commonly used

to determine an advertising budget. They are what can be afforded, percentage of sales,

competitive policy and objective and task.

6) Deciding on the promotion mix:- The promotion budget must be effectively distributed

among the four promotion tools of advertising, sales promotion, public relations and sales

force.

7) Measuring Promotion’s results:- After implementing the promotional plan, the

communicator, must measure its impact the target audience. This involves asking the target

audience whether they recognize or recall the message, how many times they saw it, what

points they recall, how they felt about the message, and their previous and current attitudes

toward the service and the company.

8) Managing Coordinating the marketing communication Process:- The stakes are high,

communication process is complicated and communication is expensive, therefore it is

imperative that it be coordinated. Other wise the messages might be ill timed in terms of the

availability of goods; they may lack consistency; or they might not be cost effective. Left

alone each manager of communication resources will fight for more budgets irrespective of

the relative merits of each tool.

Role of Communications in services:


Services Marketing

Developing a effective communications program begins with an understanding of the role

of communications within the service organization. The purpose of communications is to

inform, persuade, or influence consumer behavior. However, the specific role of

communications will vary depending on the purchase phase.

Communication and purchase process:-

The purchase process consists of three phases: the pre-purchase phase, the consumption

phase, and the post-purchase phase. Communications is a critical component of each phase.

Pre-Purchase phase:- In the pre-purchase, communication can be used to accomplish any of the

following objectives. a) reduce purchase risk, b) Increase the probability of a purchase, c)

develop the corporate image, d) build brand equity, and e) increase awareness.

Consumption Phase:- During the consumption phase, communications can be used to

accomplish two objectives: enhance customer satisfaction and increase repeat purchase.

Post-Purchase Phase:- Post-purchase communication are designed to reduce cognitive

dissonance, simulative positive word mouth of communications, or increase repeat purchase

behavior.

Advertising:-

It is a paid form non-personal presentation about the products or services to their target

consumers. It is the best tool for building brand and firm equity. It is able to reach a vast

number of consumers simultaneously and is highly flexible.

Role of Advertising:-

1) Informative advertising:- It provides information to an audience about a service.

Eg:- A service retailer advertises its operating hours and store locations

2) Persuasive Advertising:- It involves an effort by the advertiser to convince consumers of a

particular point of view.

Eg:- A service retailer advertises it offers the highest quality service of anyone in town.

3) Reminder Advertising:- It involves the use of cues in an advertising to enhance brand and

firm recall.

Eg:- A service retailer uses a billboard to promote the brand name and prove the location of

the facility


Services Marketing

4) Action inducing advertising:- It attempts to persuade viewers to either purchase a service or

inquire about it.

Eg:- A service retailer offers a 40% off coupon in its advertisements to encourage customers

to patronize the store.

Advertising and Service Characteristics:-

Services possess four unique characteristics. Advertising can be used to reduce the

negative impact of these characteristics. Decreasing intangibility, pershiability, inseparability,

and variability can be beneficial to service firms in the following ways;

It can increase the probability of a purchase by the consumer

Consumer expectations are more clearly defined and understood by the consumer

The perceptions of service quality are normally enhanced since the consumer know what

to except

The level of customer satisfaction with the service increases since consumer go into the

service experience with more knowledge about what will happen.

Ways Advertising can be used

Explanations Example

Intangibility It can be reduced by including

tangible cues in the advertisement

An airline shows the interior of the

airplane in the advt. when discussing

comfort

Perishability It can be reduced by informing the

public about demand levels of the

firm

A resort advertises non-peak periods

encouraging vacationers to book

their trips

Inseparability It can be reduced by advt. the

automation of the service

A bank advertisers their online

banking services

Variability It can be reduced by promoting

either the industrialization or

customization of the service

A fast – food restaurant advertises

they will make your sandwich the

way you want it

Reducing

Purchase risk

It can be minimize through reducing

the consequence component of risk

An automobile repair service advt.

all of their mechanics are certified as

well as receive special training


Services Marketing

Consumer

positioning of

the firm

Through Advt, the position of the

service relative to the competition

can be reinforced

An accounting service positions

itself as the best accounting service

for retail business operations

Develop brand

loyalty

By promoting the quality and image

of the brand, brand loyalty is

enhanced

An internet service provider

promotes the quality of their brand

name

Encouraging

repeat purchase

behavior

By supporting sales promotions

advertising can be used to encourage

repeat purchase behavior

A dry cleaner can use advertising to

promote specials and to offer

coupons and premiums.

Sales Promotions:

In recent years, firms have shifted more of their communications budget from advertising

to trade and consumer promotions. Trade promotions refer to offers made by to businesses,

whereas consumer promotions are offers given to end-users or consumers.

Reason for shifting to sales promotion:

1. Trade and consumer promotions normally have an immediate impact on sales, whereas

advertising takes a longer period of time

2. Sales promotions is increasing brand proliferation and parity among service firms

3. Increase of sales promotions is greater consumer acceptance of promotions and in some

instances their demand for promotions

4. Increase in sales promotions is the declining impact of advertising

Sales promotion options:-

Coupons:- Printed price reduction offers are an excellent strategy for stimulating sales,

especially in the short term

Premiums:- Free merchandise or services offered to customers for purchasing the service

Contests:- A sales promotions that allows customer to win free prizes for performing some

activity or making a purchase

Sweepstakes:- Sales promotion that awards free prizes to customers based on a drawing of

winning tickets

Tie-ins:- Promotion of two or more services offered within the same sales promotions


Services Marketing

Frequency Programs:- Sales promotions aimed at current customers to increase repeat purchase

behavior and brand loyalty through regarding them for multiple purchases

Sampling:- Free delivery of a service to a consumer with the intent of gaining future purchases

Price-off:- Temporary reduction in the price of a service designed to stimulate immediate sales

increases

Rebate:- Cash reimbursement paid to a consumer with a proof of purchase for a durable service

Refund:- Cash reimbursement paid to a consumer with a proof of purchase for a service.

Use if Sales promotions in meeting communication objectives:-

Objective CouponsPremium

s

Contests

&

Sweepsta

kes

Tie-ins

Frequenc

y

programs

SamplesPrice –

offs

Rebates

&

Refunds

Reduce purchase risk E P N G N E E PIncrease purchase probability E F F G G E E F

Develop corporate image N G P F G F P F

Build brand equity N G P F G F P PIncrease awareness P P E G F G P PEnhance customer satisfaction P G N N F G P N

Increase repeat purchase behavior E E F F E N E G

Reduce cognitive dissonance N G N P F N P P

Positive W-O-M P G P P G N P F

E – Excellent G- Good F –Fair P – Poor N – No

Use of Sales promotions and service operational positions:

Positions Coupons Premiums

Contests

&

Sweepstak

es

Tie-insFrequency

programsSamples Price –offs

Rebates &

Refunds

Cost efficiency E F E E G E E P


Services Marketing

Technical service quality P E P G G E P F

Functional service quality P G F P G G P F

Customization P G P P G P P F

E – Excellent G- Good F –Fair P – Poor N – No


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