Unit I

Introduction to Services Marketing

 Topics

• Understanding Services marketing,

• Characteristics of SM,
• Classification of services marketing,
• Goods vs. Services,
• Services Marketing Mix,
• Service and Technology.
 Objectives

After studying this unit, you will be able to:

 Describe the concept of services marketing

 Discuss the service characteristics
 Distinguish between Goods and services
 Explain the need for special services marketing.
 Introduce the expanded services marketing mix.
 Marketing

 Marketing is CCD

 It is a process of creating, communicating and

delivering the value to the customer in order to
satisfy their needs.
 Service

 American Marketing Association, which, as early

as in 1960, defined services as activities, benefits, or
satisfactions which are offered for sale, or provided in
connection with the sale of goods.

 Robert Judd defined service as a market transaction

by an enterprise or entrepreneur where the object of
the market transaction is other than the transfer of
ownership of a tangible commodity.
 Service

 Kotler and Bloom, in 1984, defined services as any

activity or benefit 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.

 Valarie defines services as all economic activities ,

benefit, satisfaction, whose output is not a physical
product, it is generally consumed at the time it is
produced, it is provided value in forms of
convenience, amusement ,timeliness, comfort,
health, etc.
 Distinction

Service Industry, Service as a product, Derived Service

and Customer Service.

1. Service Industry: Is a set of companies whose core

product is a service.
Ex: Hospitality Industry – Hotel du Centre, Le Meridian
Transportation Ind. – Jet airways, Indian airways, red bus.
Banking, Insurance and Financial Service Ind– PNB,ICICI
bank,
Health care ind. -- Max hospital, Apollo hospital.
 Examples of Service Industry

 Health Care
 hospital, medical practice, dentistry, eye care
 Professional Services
 accounting, legal, architectural
 Financial Services
 banking, investment advising, insurance
 Hospitality
 restaurant, hotel/motel, bed & breakfast,
 ski resort, rafting
 Travel
 airlines, travel agencies, theme park
 Others:
 hair styling, pest control, plumbing, lawn maintenance,
counseling services, health club
 Distinction Cont...

2. Service as product: Is all intangible products

offering and provide by one organization to its
customer and that customer pay for in the
marketplace to satisfy their needs.
Services are sold by service and non service
companies.
Ex: Gift wrapping, MBA course, heart healing, rental
services , holidays package…
 Distinction Cont...

3. Customer Service: Is the service provided in

support of a company’s core products.

 It can be given for free: Sre Railways Station

inquiries, Samsung customer service.
 Can occur on the site: Help desk in Mall, Honda
Scooter
 Can occur online: instant chatting while booking on
Yatra
 Can occur on phone: call center
 Distinction Cont...

 Note: Quality customer service is essential to building

customer relationships. It should not be confused with
the service provided for sale.

4. Derived Service: Means the value derived from physical

goods is exactly the service provided by the good but it is
not the good itself.
E.g:
 A pharmaceutical drug (goods): Provides medical service
(healing),
 A computer (goods): provides information and data
manipulation service (Decision making)
 A razor (goods) provides barbering service (shaving)
 Examples

Service Service Service Customer Service

Industries Companies Product
Health care Max Hospital Cancer Ambulance
treatment, heart
treatment.
Education Glocal University MBA, BBA, BCA Bus for outing

Telecommunic Airtel 2G, 3G, 4G Call center (toll free)

ation wireless

Banking ICICI Bank Funds transfer, ATM, Call center (toll

loan, managing free)
account..
 Tangibility Spectrum

Services are not tangible things that can be touched,

seen, smelt rather services are intangible things that can
be felt, services are deeds, processes and performance
provided or coproduced for its customer.
Tangibility is a key determinant of whether a product is
a service.
 Some products are purely intangible: pure service
 Some products are purely tangible: pure goods
 Some products offer both service and good
 Tangibility Spectrum


Example of service-product and goods-product

Company Industry Components

Fast-Food
(Burger king) Hospitality (service) Foods, Packaging, Drink

Automobile Manufacturing Transportation, Navigation

(Honda) (Goods) (GPS)
 Importance of service marketing:

 Due to changing needs of customers, changing

world, changing lifestyle and technological change
and innovations, the market has become customer
service oriented. Therefore, it is very important to
learn about service marketing, service quality,
service delivery and service management.

 Hence Service marketing can attract the clients to

obtain the services.
 Characteristics of SM

Services have fives distinctive characteristics, which

necessitate different marketing strategies. They are as
follow:

1. Intangibility: Services are intangible, we cannot touch

them are not physical objects. The buyer does not have any
opportunity to touch smell, and taste the services.

For example – You can touch your Smartphone. But, you

cannot hold or touch the services of your telecom service
provider.-- An airline sells a flight ticket from A destination
to B destination.
 Characteristics of SM Cont..

2. Perishability: It cannot be stored, it cannot be

inventoried. Unutilized services are an economic
waste. An unoccupied building, credit unutilized, etc.
are economic waste.
 The service once sold it can’t be returned
 They can’t be saved for later use
E.g: Doctor treatment, a movie ticket, hair cut, flight
ticket…
 Characteristics of SM Cont..

3. Inseparability: Services are generally created or

supplied simultaneously. The production, distribution,
and consumption takes place simultaneously. These
three functions cannot be separated. Services and
their providers are associated closely and thus, not
separable.

Donald Cowell states “Goods are produced, sold and

then consumed whereas the services are sold and then
produced and consumed”.
 Characteristics of SM Cont..

 For an e.g., the entertainment industry, health

industry and other professionals create and offer
their service at the same given time.
 if you went to a parlour for haircut, how it cannot be
possible without your presence and involvement.
 Teacher and students
 Doctors and patients
 Airlines and customers
 Characteristics of SM Cont..

4. Heterogeneity: The quality of services cannot be

standardized. The price paid for a service may either
be too high or too low as is seen in the case of the
entertainment industry and sports. The same type of
services cannot be sold to all the consumers even if
they pay the same price.

 It is impossible to provide similar service every time.

You’ll experience some change every time you buy a
particular service from a particular service provider
 Characteristics of SM Cont..

 For example – Yesterday you had a coffee at

canteen. Today, you are again at canteen have a
coffee, but you have got different place to sit today;
the person served you coffee is different today; other
people having coffee are also different today. Hence,
your experience of having coffee today is different as
compared to yesterday.
 A doctor who pays attention to you today will not
give the same to you tomorrow.
 Characteristics of SM Cont..

5.Ownership: In the sale of goods, after the

completion of process, the goods are transferred in the
name of the buyer and he becomes the owner of the
goods. But in the case of services, we do not find this.
The users have only an access to services. They cannot
own the service. It means to say that consumer never
own the services.

 For e.g. a consumer can use personal care services

or medical services or can use a hotel room or
swimming pool, however the ownership remains
with the providers.
 Goods vs. Services

Difference between Services and Goods

Basis Services
Tangibility Services are intangible in nature.
They cannot be touched or hold.
Separability Services are inseparable in nature.
Production, distribution, and
consumption of service take place
simultaneously.
Ownership Services cannot be owned. They can
be hired for a specific time period.
Goods
Goods are tangible in nature. They can
be touched and hold.
Function of distribution and
consumption of goods can be
separated from the function of
production.
Goods can be owned.

Perish-ability Services get perished after a specific Goods can be stored for future use.
time period. It cannot be stored for
future use.
Heterogeneity Services are more heterogeneous. It Goods are less heterogeneous. It is
is very difficult to make each service possible to make each goods identical.
identical.
 Classification of services marketing

On the basis of end -user

Consumer Service - B To C: Business to consumer (B2C) is business or
transactions conducted directly between a company and consumers
who are the end-users of its services.

E.g: Amazon.com, Yatra.com, Printland Ltd, Air India, Banks.

Business To Business service - B To B: Business to business refers to

business that is conducted between companies, rather than between a
company and individual consumers.

 E,g: Banks, Advertising Agency, Counseling agency.

 Classification of services marketing

 Industrial Services: an industry that provides

intangible industrial services, such as chemical
cleaning pipe cleaning, removal, cutting and
isolation. demolition preparation, reconstruct &
relocate. project development, installation of plants.
On the basis of durability

 Durable services: are consumer services that do not

need to be purchased and sold frequently because
they are made to last for a long time (usually lasting
for one year or more).
E.g: Building of house, building of ship
 Classification of services marketing

 Less durable service: are consumer services that do

not need to be purchased and sold frequently because
they are made to last for a some time (usually lasting
for one month or more).
E.g: Painting of building,
 Non durable service: usually lasting for few hours or
for few minutes
E.g: Taillor, Transport, Packing food, Pizza home
delivery...
 Marketing Mix of Service

 “Marketing mix is the set of marketing tools that the firms

use to pursue its marketing objectives in the target market.”
KOTLER

 “The sum of elements of business activity that can be used

by a firm to fulfill its marketing strategy is called the
marketing mix.” Greyson and Olson
 “Marketing mix is the term used to describe the
combination of the four inputs which constitute the core of
a company’s marketing system: The product, the price
structure, the promotional activities and the physical
distribution system.” William J Stanton
 Marketing Mix of Service

ELEMENTS OF MARKETING MIX

1. Product 2. Price 3. Place 4. Promotion

Quality Special Channels Advertising

Style discounts Coverage Personal
Brand name Allowances Locations Selling
After sale Terms of credit Inventory Sales promotion
After sale service Transport Public relation
Warranties
Packaging
 Marketing Mix of Service

1. Product: Refers to a tangible or intangible offering

of an organization. The tangible products can be
manufactured in large quantity. For example: car,
battery, computer, refrigerator etc.. The intangible
products are produced on a small scale with
customization. For example: car and home loan,
insurance, computer operating system and
consulting are produced as per the requirement of
the customers.
Product means any goods or service that consumer
wants. It implies , information goods, idea ….produced.
 Price:

2. Price: Refers to the amount a customer pays for the

product. Is a demand regulator. Price is a significant
factor that affects the entire market including business
firm. Pricing decision and pricing policies influence
sale’s volume and business profit. Pricing of services is
very difficult to determine because per unit cost is
difficult to determine. The price of services fluctuate
according to the seasonality or time of service.
 In case of intangible and people based services, it is
difficult to calculate the cost and determine the price.
In professional services, for example, fees of doctors,
lawyers, and chartered accountants are not the same.
 Marketing Mix of Service

3. Promotion: Represents all communication methods

(Advertising, public relation, personal selling and sales
promotions) that a marketer can use to reach a customer.
Promotion component brings products to the notice of
customers and persuades them to buy. Promotion helps
business firm in informing the consumer regarding its
product. It influences the customers.
4. Place: This element is based on the choice of place
where products are to be displayed for the customer. It is
concerned with decisions relating to the wholesale and
retail outlets or channels of distribution. Channels of
distribution for intangible dominant products such as
services are generally limited to the buyers and sellers.
 Extended Service Marketing Mix

The extended service marketing mix places 3 further P’s which

include People, Process and Physical evidence. All of these
factors are necessary for optimum service delivery.
 Marketing Mix of Service

5. People: Because of the simultaneity of production and

consumption in services the company employee staff occupy the
key position in influencing customer‘s perceptions of product
quality. In fact the service quality is inseparable from the quality of
service provider.

6. Physical evidence: This is the environment in which the

service is delivered and any tangible goods that facilitate the
performance and communication of the service. Since service is
a matter of experience, it is important for the client to search for
tangible or physical clues, which enable them to evaluate the
service.
 Physical evidences are of two types as follows:
 Essential evidence: Building, interior decoration, logo of the
service organization are essential evidences.
 Marketing Mix of Service

 Peripheral evidence: The purchase of service has

little or no independent value. It is usually a part of
peripheral evidence. For example, a chequebook, is
useless if it does not transfer or store any fund.
7. Process: This means procedures, mechanism and
flow of activities by which a service is acquired.
Process decisions radically affect how a service is
delivered to customers. The service includes several
processes for e.g. first contact with customers,
administrative procedure regarding course delivery,
preparation, delivery and evaluation of the courses.
 Role of technology in service marketing

 Technology is influencing the practice of services

marketing.

 The technology has been the basic force behind the

service innovation. Automated voice mail, interactive
voice response systems, fax machines, ATMs etc., are
possible only because of new technology.
 Role of technology in service marketing

 The role of technology and physical aids in

service delivery system are summarized below:
1. Easy accessibility of service: Internet based
companies find that internet makes offer of new
services possible. Internet based bill paying service
ensures convenience to the customers while availing
services.
E.g: -Cars are equipped with map and routing software
which direct drivers to specific locations.
-Accessing the Web via cell phones is possible
nowadays.
 Role of technology in service marketing

2. New ways to deliver service: Technology provides

vehicles for delivering existing services in more
convenient ways.
E.g: bill paying, checking accounts records, tracking
orders, seeking information, etc.
3. Close link with customers: Financial service
companies achieve a close link with their customers by
employing the latest technology. Computers are linked
into clients’ information systems.
This provides the client with better service by
facilitating an integrated client relationship.
 Role of technology in service marketing

 4. Higher level of service: Technology enables both

customers and employees to be more effective in
receiving and providing service respectively. Self-
service technologies enable customers to serve access
to their accounts, check balances, apply for a loan,
and transfer money among various accounts.

 Customer relationship management and sales

support software aid frontline employees in
providing better service.
 Role of technology in service marketing

5. Global reach of service: . Technology allows

employees of international companies to share
information. Technology-based service can be
extended to the customers living around the globe.

The internet is just one big service which knows no

boundaries. Information, customer service and
transactions can move across countries. The service
provider can reach any customer who has access to the
web.
 Role of technology in service marketing

6. Cost rationalization: Customer expectations are high

because of the excellent service they receive from some
companies. They expect high quality of service at
reasonable cost. It can replace less skilled people
working in frontline service jobs.
For example, automatic car wash and automatic cash
dispenser are desired by the customers for their
promptness in work. Websites providing answers to
specific disease, drug and treatment details are
another standing example for cost rationalization.
 By Guylain LBK
Master in Business Administration
Digital Marketer
guylain@theglocaluniversity.in