SERVICE MARKETING

Aug Dec. (2008)

SERVICES

Service is an act or performance offered by
one party to another that is essentially
intangible and does not result in the
ownership of anything.

TRENDS IN SERVICES SECTOR

Service industry known as tertiary industry (primary
agri, mining; secondary manufacturing)
Share of services, industry, and agriculture in India's
GDP is 55.1 per cent, 26.4 per cent, and 18.5 per
cent respectively
A KPMG survey of BRIC countries (Brazil, Russia,
India and China), has revealed highest confidence
among the service sector in India with 60% of the
Indian firms expect rise in activity, a few notches
above than that of China
TRENDS IN SERVICES SECTOR
Factors contributing to growth:

1. Government Policies
Govt. regulations,
Privatisation

2. Social Changes
Rising customer expectations
More affluence
Increased desire for buying experiences vs products
TRENDS IN SERVICES SECTOR
Factors contributing to growth:

3. Business trends
Mfrs. Adding value through services
Quality Movement
Growth of franchising
4. Advances in Information Technology
Growth of internet
Convergence of computers & telecommunications
5. Internationalisation
More cos. operating on transnational basis
International mergers & aquisitions
TRENDS IN SERVICES SECTOR
The various sectors that combine together to constitute service
industry in India are:

Trade
Hotels and Restaurants
Railways
Other Transport & Storage
Communication (Post, Telecom)
Banking
Insurance
Dwellings, Real Estate
Business Services
Public Administration; Defence
Personal Services
Community Services
Other Services

TRENDS IN SERVICES SECTOR

While almost all service sectors
participated in this boom, growth was
fastest in communications, banking,
hotels and restaurants, trade and
business services.

INTERNAL SERVICES
Service elements within an organization that facilitate
creation of--or add value to--its final output
Includes:
accounting and payroll administration
recruitment and training
legal services
transportation
catering and food services
cleaning and landscaping
Increasingly, these services are being outsourced

GOODS AND SERVICES
Differences between goods & services

Customers do not obtain ownership of services
Service products are ephemeral & cannot be
inventoried
Intangible element
Customers maybe involved in production process
Other people part of product
GOODS AND SERVICES
Differences between goods & services

Greater variability in operational inputs &
outputs
Services are difficult for customers to
evaluate
Time factor assumes more importance
Distribution channel take different forms
Value Added by Tangible vs
Intangible Elements in Goods
and Services
Fast food restaurant
Plumbing repair
Office cleaning
Health club
Airline flight
Retail banking
Insurance
Weather forecast
Salt
Soft drinks
CD Player
Golf clubs
New car
Tailored clothing
Furniture rental
Lo
Hi
Hi
Intangible Elements
CLASSIFICATION OF SERVICES
A significant classification is based on
process (taking an input & transforming into
an output)
Marketers of services need to understand
nature of services to which customers are
exposed
Services range from simple procedures to
highly complex activities

CLASSIFICATION OF SERVICES
People Possession
People Processing Possession processing Tangible
- Passenger transportation - Freight transportation actions
- Health care - Repair & maintenance
- Lodging & Restaurant - Retail distribution

Mental stimulus Information processing Intangible
- Advtg. & PR - Accounting & Bkg actions
- Education - Insurance & Legal
- Entertainment & Arts - Software Consulting
CLASSIFICATION OF SERVICES
1. People processing

Customers must physically enter the service
system as they are integral part of process
They must spend time interacting & co-
operating with service providers
Process & output is important

CLASSIFICATION OF SERVICES
2. Possession processing

Providing treatment to possession. Customers less
physically involved
Customers involvement to drop item that needs
treatment, requesting the service, explaining
problem & later picking it up & paying the bill.
If object to be processed is difficult to move then
service factory comes to customer


CLASSIFICATION OF SERVICES
3. Mental stimulus processing

These services interact with the customers minds
which has the power to shape their attitude &
behaviour. Core content is information
Customers not physically present, but mentally
connected with information presented.
Recipients have to make investment of time
CLASSIFICATION OF SERVICES
4. Information processing

Information is most intangible but can be made
tangible by letters, reports, books
Financial & professional services are strong
examples of collection & processing of information
No requirement of personal contact with supplier of
service. Contact could be over e-mail, telephone.
IMPLICATIONS OF SERVICE PROCESS
1. Designing Service Factory (people proc.)
When customers have to be physically present
throughout delivery, process must be designed with
them in mind right from the moment they arrive
the service factory.
Choose convenient location
These factors assume importance
exterior & interior facilities,
encounters with service personnel,
interactions with self-service equipment
characteristics of other customers
IMPLICATIONS OF SERVICE PROCESS
2. For possession-processing, mental-stimulus processing,
or information processing services, alternatives include:

1. Customers come to the service factory
2. Customers come to a retail office
3. Service employees visit customers home or workplace
4. Business is conducted at arms length through
- physical channels (e.g., mail, courier service)
- electronic channels (e.g., phone, fax, email, Web site)

IMPLICATIONS OF SERVICE PROCESS
3. Making most of Information Technology
All services can benefit from IT, but mental
stimulus processing and information- processing
services have the most to gain.
Remote delivery of information-based services
anywhere, anytime
New service features through websites, email, and
internet (e.g., information, reservations)
More opportunities for self-service



IMPLICATIONS OF SERVICE PROCESS
4. Balancing Supply & Demand
Problems arise because service output cant be
stored
If demand is high and exceeds supply, business
may be lost. If demand is low, productive capacity
is wasted
Services that process people & possession face
more capacity limitations. Increasing capacity
entails huge costs. Managing demand becomes
more important.




IMPLICATIONS OF SERVICE PROCESS
5. People becoming part of Product

When people become part of service, their
attitude, behaviour & appearance can
enhance it or detract it
Managers should be concerned about
employees appearance, social skills,
technical skills



SERVICES MARKETING MIX
Product
Place & Time
Promotion & Education
Price
Physical Environment
Process
People
INTERDEPENDENCE OF
MARKETING, OPERATIONS & HR
Customers
Operations
Management
Marketing
Management
Human Resources
Management
SERVICE BUSINESS AS A SYSTEM
Three Overlapping Sub-systems
Service Operations (front stage and backstage)
Where inputs are processed and service elements created.
Includes facilities, equipment, and personnel
Service Delivery (front stage)
Where final assembly of service elements takes place
and service is delivered to customers
Includes customer interactions with operations and other
customers
Service Marketing (front stage)
Includes service delivery (as above) and all other contacts
between service firm and customers
SERVICE MARKETING SYSTEM
High Contact Service
Service Delivery System
Other Contact Points

Service Operations System






Backstage Front Stage
(Invisible) (Visible)



The
Customer
Technical
Core
Interior & Exterior
Facilities
Equipment
Service People
Other
Customers
Other
Customers
Advertising
Sales Calls
Market Research
Surveys
Billing / Statements
Miscellaneous Mail,
Phone Calls, Faxes, etc.
Random Exposure to
Facilities / Vehicles
Chance Encounters
with Service Personnel
Word of Mouth
SERVICE MARKETING SYSTEM
Low Contact Service
Service Delivery System
Service Operations System Other Contact Point

Mail

Self Serv.
Equipment

Phone,
Website

Backstage Front stage


Technical
Core





Customer
Advertising

Market Research
Surveys

Word of Mouth


Customer
Theatre A Metaphor for Service
Delivery
Service facilities is the stage on which
drama unfolds. Some cases customers
own facilities provide stage.
Stage can have minimal props or very
elaborate
Service dramas could be tightly scripted or
improvisational
Settings change from one act to another
Front stage personnel play roles of actors
( sometimes wearing costumes) supported
by backstage production team
SERVICE PLANNING
Operating Assets
(Facilities/Equipment, IT Systems,
People, Op. Skills, Cost Structure)
SERVICE PLANNING
Corporate Objectives
and Resources
Service Delivery
Process
Marketing Assets
(Customer Base, Mkt. Knowledge,
Implementation Skills, Brand Reput.)
Service Marketing Concept

Benefits to customer from core/
supplementary elements, style,
service level, accessibility

User costs/outlays incurred
Price/other monetary costs
Time
Mental and physical effort
Neg. sensory experiences

Service Operations Concept

Nature of processes
Geographic scope of ops
Scheduling
Facilities design/layout
HR (numbers, skills)
Leverage (partners, self-service)
Task allocation: front/backstage
staff; customers as co-producers
SERVICE PLANNING
1. Starts with statement of objectives or
mission at corporate leve
2. This mission leads to two types of
analysis SWOT Analysis identifying
strengths, weaknesses, opportunities &
threats on marketing & operations fronts
Market & Competitive Analysis
Resource Allocation analysis appraisal of
firms resources, how to allocate them &
identifying additional resources

SERVICE PLANNING
3. Each analysis draws two statement of
assets
a. Marketing assets statement which
includes customer portfolio, market
knowledge, marketing implementation
skill, product line, reputation of brands &
positioning strategies.
b. Operating assets statement which
includes Physical facilities, equipment,
Information technology, H.R. (numbers &
skill), alliances & partnerships, cost
structure

SERVICE PLANNING
4. Statement of assets leads to creation of
the following concepts. This must be an
interactive process.
a. Service marketing concept to clarify
benefits to customers & costs they shall
incur
b. Service operating concept clarifies
nature of processes & how & when
operating assets should be deployed
5. Set of choices before the management in
configuring delivery process.