Chapter 1

Syllabus
Concept and development of service marketing
Differences in goods versus services marketing
Challenges for services marketing
The service marketing triangle
Service marketing Mix

Concept of Services marketing

Definitions :
American Marketing Association : Services are activities,benefits,satisfactions
which are offered for sale or provided in connection with sale of goods.
William J. Stanton : Services are separately idenfifiable,intangible activities which
provide want, satisfaction when marketed to consumers and/ or industrial users
and which are not necessarily tied to sale of product or another service.
Philip Kotler : Service is any act or performance that one party can offer to another
that is essentially intangible and does not result in the ownership of anything. Its
production may or may not be tied to a physical product.
Services are economic activities offered by one party to another. Often timebased,performances bring about desired results to recipeients,objects or other
assest for which purchasers have responsibility.

In exchange for money,time,and effort, service customers expect value from access
to goods,labor,professional skills,facilities,networks,and systems, but they do not
normally take ownership of any of the physical elements involved.
What constitutes the service sector?
- Pure stand alone services like physiotherapy,counselling and consultancy
- A combination of service and goods like restaurants, retailing etc.
- Service as a component of goods in the total marketing-mix, like after sales
service, service and repair of home appliances etc.
Thus, service is distinct from yet also simultaneously a part of - the products
marketing mix.

DEVELOPMENT OF SERVICE MARKETING

Human civilization closely relates with all the developments recently seen
in service marketing sectors.
Production of surplus quantity of goods has given birth to the concept of
exchange.
Service has emerged to recent definition through various changes.
It just was the concept of religion which after 1960 A.D. get changed to the
concept of social organization and volunteering.
Finally during 90s the concept developed and the service rendering firms
were defined as the associations with solutions to customers problems.

And in recent scenarios the service market is

found generally connected with the Knowledge
Company (companies working in the field of IT)

DEVELOPMENT OF SERVICE MARKETING

Self sufficient economy- service was limited within family and community,
but it has no economic value.
Barter economy- service was related to exchange of goods.
Production oriented economy- service was availability of goods.
Production oriented economy- durability of good was key issue.
Marketing concept.
Societal marketing concept.
Service marketing.
Holistic marketing concept.

Reasons for Development of Service sector

Change in the family system

Change in the life system, philosophy of life,vision
Economic properity
Concept of service,leisure,pleasure changed
Urbanization
New business organizations
Awareness of people,educated people
Change in marketing concept
Create demand then satisfy
It became part of every business.
Importance of personalized service.

Nature / Characteristics of Service Product

1.

Intangibility

2.

Variability

3.

Perishability

4.

Inseparability

5.

Simultaneity

 Service marketing triangle

Firm

Internal
Mkt.

Employees

External
mkt.

Interactive
Mkt.

Customers

Assignment !!
Make the list of 20 big companies
punchline.

Like manufacturing industries

Services industries are also bound to
apply several strategies to gain
competitive advantages in the market.
They often practice their strategies
via slogan like Royal bank of Scotland
(one of the largest bank of the world)
promises to make it happen
to its customers. DHL offers on-time
delivery, Apollo hospitals aim
at touching lives
and Ncell- for nepal.
Services marketing triangle is also strategies :
Internal Marketing
External Marketing
Interactive Marketing

EXTERNAL marketing ( making

the promise)
covers all the series
of marketing activities that are carried
down to communicate target
customers of the market. This involves
setting the companys promise of
value and satisfaction to the
customers.
The promises would be
communicated through promotional
campaigns through Newspapers,
Multimedia and improving the quality
of service, providing better service
and meeting customers expectation
ultimately satisfies the customers. This
all goes with external
Marketing which often been pursued
by Service providers.

 Internal Marketing(Enabling
the service)
menas that the service firm must be
centered and motivate and contact
employees and support people to work
as a team to
provide customers satisfaction.
Marketers must get everyone in the
organization to be customer centered.
Most of airlines, hotels they give their
best attention to prepare their human
resources so that their internal
marketing would be flawless.

 Interactive Marketing :
(Delivering the service)
It says service quality depends
heavily
on the quality of the buyer-seller
interaction
during the service encounter. In
product
marketing, product quality often
depends little on
how the product is obtained. But in
services
marketing, service quality depends
on both the service provider and the
quality of the delivery. Services
marketers , therefore have to
mastered in interactive marketing
skills.
Interactive here does mean the skills
of the service provider and his
ability of quality service.

Challenges for Services marketing

-

To know the needs and expectations of modern customers.

Designing and testing of services
To maintain same image of service which is consistent
Service delivery while fluctuating demand
To evoke and inspire or say motivate service employees.
Fixing the service price
To maintain balance between standardization and personalization
Saving to be copied new service concept
To communicate exact value and quality of the service to the targeted customers.
Keeping quality of service consistent

Service marketing V/s Goods marketing

Service marketing is to manage, develop, promote
and exchanged service to attain organizational
goal. It is to plan, develop and provide service to
the customers to satisfy their need to attain
organizational goal.

Services marketing is marketing based on

relationship and value. It may be used
to market a service or a product.

 Whereas Product marketing concerns with

executing conception, distribution, promotion,
pricing of goods to satisfy needs of customers
along with creating value to customers and
capture value from customers for organization
as profit and revenue.
Product marketing deals with the first of the
"4P"'s of marketing, which are Product,
Pricing, Place, and Promotion.

When you are marketing a service, you are really

marketing relationship and value. This relationship and
value needs to be marketed differently than if you are
marketing actual products.

Another major difference between marketing services

and marketing products is that when a buyer purchases
a service, the buyer is purchasing something that is
intangible, instead of a tangible product, like a
computer or a sprinkler system or a web page.

It is pretty easy to compare the quality of

different products. It's easy for you to see if one
computer works more quickly than another
computer, or if one TV has a better picture than
another picture, or if your child can break a toy
more easily than another toy. However, it is
much more difficult to compare the quality of
similar services that are provided.

 Products are returnable. However, services are not

returnable. How to market services. Generally
speaking, marketing a product requires what are
known as the "4 P's": Product, Price, Place, and
Promotion. Marketing a service adds three more "P's"
to the traditional "4 P's": People, Physical evidence,
and Process. Service marketing also includes marketing
what is known as the service scape, which is the
aesthetics of your business place: the outside of your
business building, the inside of your business building,
and the way that the employees look.

 The ownership is not transferred in Service

marketing.
Ownership is transferred in product marketing when
a purchase is made.
It is not possible to produce, transport and sale in
shop so service marketing needs to develop point of
sale. Such as reservation system, service order etc.
However it can be done on product marketing.

Service marketing compulsorily needs to manage

tangible evidence, service environment, service
employee personality etc for value creation. But
in product marketing, product itself represents it
value and quality.
It is difficult to maintain standardization on service
delivering in service marketing. There is
variability in service delivered by a same service
provider at a same time. Whereas it can be done
on product marketing by standardized products.

 Service management significantly considers time

management. Since, service is produced for on
time consumption though it is not stored and
consumed later after purchasing. Product doesnt
need necessarily consumption at the time of
purchasing and production.

Benchmarking is difficult in service marketing

than product marketing.

 The role of Human resource

management is crucially considered
in service marketing than product
marketing as service quality and
value depends up personality,
quality of service provider.
In service marketing bad service
cant be replaced which affects
adversely in good will of firm in
long term whereas products can be
replaced to rectify the errors.