Services Marketing

The service sector The services sector has been growing at a

rate of 8% per annum in recent years More than half of our GDP is accounted for

from the services sector This sector dominates with the best jobs,

best talent and best incomes

“There are no such thing as service industries.There are only

industries whose service components are greater or less than those of other industries.

Everybody is in service.”

-Theodore Levitt-

Growing Importance of Services Economic well being increases the demand

of services Changing lifestyle Complexity of the product Higher % of women in labour force

What is services?

It is the part of the product or the full product for which the customer is willing to see value and pay for it.

What is a service? It is intangible. It does not result in ownership. It may or may not be attached with a

physical product

Characteristics of Services Intangibility Perishability Inseparability Variability Client relationships Right of owner-ship

Intangibility Hard to grasp, concept is

abstract

Dramatization often necessary for concept

Hard to separate the service provider and the service

Perishability Services cannot be stored or

held in inventory.

If not used when available, they “go to waste”.

Inseparability Outlet accessibility can limit

the area covered by the service.

Image is important: Image affects the perception of the service.

VariabilityService quality tends to

vary considerably.

Haircut from your hair dresser vs. “Javed Habib”

Client Relationships Relationships between service

organizations and customers are often close

Potential for loyalty longterm

Right of owner-ship It is not taken to the service,

we merely experience it. e.g. Services of a doctor,

lawyer, teacher, mechanic, etc..

Difference between physical goods and services

Physical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are separated from consumption

Production, distribution and consumption are simultaneous processes

A thing An activity or process

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

Customers do not participate in the production process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

Most products have a service component

They could be Equipment based People based – varying skill levels

Services could meet Personal needs

Business needs

The Services Marketing TriangleCompany

(Management)

Providers CustomersInteractive MarketingDelivering the Promise

External MarketingSetting the promise

Internal MarketingEnabling the promise

CATEGORIES OF SERVICES

SERVICE industries and companies SERVICE as products Customer SERVICE

SERVICE INDUSTRIES AND COMPANIES- include those industries and companies typically classified within the service sector whose core product is service.

EXAMPLE:- TAJ PALACE HOTELS (LODGING) INDIAN AIRLINES

(TRANSPORTATION) BIRLA SUN LIFE (INSURANCE) FORTIS (HEALTH CARE)

SERVICES AS PRODUCTS- companies. represents a wide range of products offerings that customers value and pay for in the marketplace. Service products are sold by services companies and by non-service

EXAMPLE: IBM AND HEWLETT-PACKARD offer

information technology consulting services to the marketplace.

CUSTOMER SERVICE- is the service provided in support of the company’s core products. Companies typically do not charge for customer service.

EXAMPLE : Customer Service Centres set up by

VODAFONE, AIRTEL etc..

Bases for Service Classification Service Tangibility

Highly tangible Service linked to tangible goods Tangible goods linked to services Highly intangible

Skills and expertise required Professional services non-professional services

Bases for Service Classification Business orientation of service provider

Not-for-profit Organisations Commercial Organisation

Type of End-user Consumer services Industrial Services

Consumer Behaviour in services Factors influencing buyer behaviour

Situational Factors Socio Cultural Factors Psychological factors Personal factors

Search, Experience, and Credence Qualities

Mostgoods

Mostservices

Easy to evaluate Difficult to evaluate

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Jew

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Furn

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Hou

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Aut

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Res

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Vaca

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Hai

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Chi

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Tele

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Med

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Dia

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isHigh in search

qualitiesHigh in

Experiencequalities

High in credencequalities

SERVICES MARKETING MIX Product Place Prize Promotion People Physical Evidence Process

Services MarketingMarketing strategy.

PricingMust be more flexibleService demand is highly volatileUse price to shift demand away from peak periods

More negotiated prices

Services MarketingService Strategy

PromotionMust promote the benefits.Build a tangible image, personalize the firm.

Personal selling is critical for the professional service provider.

Services MarketingService Strategy

DistributionLocation/convenience are criticalCannot store or ship.Can postpone, substitute

Short, Direct ChannelsIntermediaries are agents or brokers

Differentiation in services Offering Delivery Image

Managing Service quality Gap between management perceptions and

consumer expectations Gap between management perceptions and

service quality specifications Gap between service quality specifications and

service delivery Gap between service delivery and external

communication Gap between expected service and perceived

service

Determinants of service quality Reliability Responsiveness Assurance Empathy Tangibles

Moments of truth It is the customer – service encounter Every positive or negative experience of

the consumer would have fall-out on the overall service experience

In services, the last experience remains uppermost in your mind. Therefore, it is not enough to be

good, you have to be consistently good

Services Monitoring Continuous auditing of competitor service

levels versus own company Importance - performance analysis

Importance – Performance Analysis

Concentrate here

Keep up the good work

Low priority Possible overkill

IMPORTACE

P E R F O R M A N C E

Service quality is directly proportional to employee

satisfaction

When customers visit a service establishment

Their satisfaction will be influenced by Encounters with service personnel Appearance and features of service

facilities – exterior and interior Characteristics and behaviour of other

customers

Customer Service Expectations Desired Service Adequate Service

Zone of Tolerance

Difference between the desired service and the adequate service

Service Encounter Themes Recovery Adaptability Spontaneity Coping

RecoveryDon’t

Ignore customer Blame customer Leave customer to fend for himself Downgrade Act as if nothing is wrong ‘pass the buck’

Do Acknowledge problem Explain causes Apologise Compensate/upgrade Lay out options Take responsibility

AdaptabilityDon’t

Promise and fail to keep them Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility

Do Recognise the seriousness Acknowledge Anticipate Accommodate Adjust Explain rules/policies

SpontaneityDon’t

Exhibit impatience Yell/laugh/swear Steal from customers Discriminate Ignore

Do Take time Be attentive Anticipate needs Listen Provide information Show empathy

CopingDon’t

Take customer’s dissatisfaction personally Let customer’s dissatisfaction affect others

Do Listen Try to accommodate Explain Let go of the customer

Types of complainers Passives Voicers Irates Activists

Customer complaints It pays to resolve customer complaints On an average only 5 % dissatisfied customers

complain. Others simply go over to the competitor

A satisfied consumer speaks to an average of 3 people on his her experience

A dissatisfied consumer gripes to on an average 11 persons about his/her unpleasant experience

Companies that pay importance to resolving customer complaints Pay attention to quality and training of manpower

recruited Have clear benchmarks on service quality and

communicate to employees Take remedial steps to improve customer

satisfaction and prevent repeats of customer dissatisfaction

Have a data base on customer complaints that is periodically analysed and policies adjusted

Satisfied employees will produce satisfied customers

Morale Motivation Mood

Managing Service Productivity Giving quality service is an expensive business Not every consumer is willing to pay extra for

service quality Service providers would have to find their

optimum service quality/cost ratios Can technology substitute part of the labour

content? Can customers substitute part of the labour

content? Making services obsolete by product innovations