Service Marketing Introduction 2011
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INTRODUCTION
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INTRODUCTION
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ABSTRACT
• GROWTH OF SERVICE SECTOR
• DEFINITION OF SERVICES
• UNIQUE CHARACTERISTICS OFSERVICES
• EXPANDED MARKETING MIX FOR SERVICES : 8 P’S
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Theodore levitt says…..
There are no such things asservice industries . There are only
industries whose servicecomponents are greater or lessthan those of other industries.
Everybody is in service.
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Contribution of Services Industries to global
GDP
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Estimated Size of Service Sector in
Selected Countries
Services as Percent of GDP
Poland (66%), South Africa (65%)
Japan (74%), France (73%), U.K. (73%), Canada (71%)
Saudi Arabia (33%)
China (40%)
India (48%)
Argentina (53%), Brazil (51%)
Panama (80%), USA (79%)
Luxembourg (83%)
Cayman Islands (95%), Jersey (93%)
Bahamas (90%), Bermuda ( 89%)
Mexico (69%), Australia (68%), Germany (68%)
Israel (60%), Russia (58%), S. Korea (56%)
30 40 50 60 70 80 902010
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• The services sector contributes more than half of theGDP in India, 60.7% as per the recent data.
• The share of services in GDP was 28.2% in 1950s
and it increased consistently over the period of thefive decades and stood at 44.3% in the 1990s.
• One in two Indians earn their living from services.
• The Service sector employs about eight workers out
of every ten.
Macro and Micro Perspectives – Indian
scenario
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Factors Influencing the Growth
of Services• Globalization of business
• Explosion of application of Information
Technology across all the sectors• General increase in living standards
• Changing customers’ preference
• Stagnant growth in agriculture• Outsourcing of services
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• Educational Services
• Health care and Hospital Management
• Financial Services (Banks, Mutual fund, Insurances, accounting and share
trading etc)
• Travel Tourism including tourist assistance activities as well as activities of
travel agencies and tour operators .
• Hotels, Restaurants• Banking and insurance
• Consultancy Services/IT/IT enabled Services
• Leisure/Entertainment/Recreation services
• Cargo, Couriers and Logistics
• Retailing• NGOs
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Attempt to define services..!
A Service is an act or performance offered by one party to
another. Although the process may be tied to a physical
product, the performance is transitory, often intangible in
nature and does not normally result in ownership of any of
the factors of production.
Can be bought and sold but which cannot be drooped on
your foot.
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Goods and Services Spectrum
Tangible
Dominant
Intangible
Dominant
SaltSoft Drinks
Detergents
Automobiles
AdvertisingAgencies
AirlinesInvestment
Management
Consulting
Teaching
Fast-foodOutlets
Fast-food
Outlets
Pure Tangible
good
Tangible
good with
services
Hybrid
Services with
minor goods
Pure services
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Fundamental Differences Between
Goods and Services (4 ‘I’ s)
Intangibility
Inability to inventory
Inseparability
Inconsistency
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I NTANGIBLITY
Universally cited as fundamental distinction from which all
other differences emerge.They cannot be seen,felt,tasted or touched in the before they
bought.
They are characterized by lack of physicality
Marketing Challenges :
• Quality dimensions• Difficult to communicate
• Difficult in Pricing
TANGIBILIZING THE INTANGIBLES
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Inconsistency (HETEROGENEITY)
It concerns the potential for high variability in the performance
of services.
Marketing Challenges :
• Standardization and quality control are difficult to achieve• Flowcharting of service delivery points
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I NSEPARABILITY
Inseparability of production and consumption involves the
simultaneous production and consumption which characterizes
most services
Marketing Challenges :• Employees affect the service outcome
• Customers may be involved in production processes.
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Inability to
inventory (Perishability)
Perishability refers to the fact that services cannot be saved,
stored, resold and returned
Marketing Challenges :• Challenges in Demand forecasting: insufficient demand or
Excess demand• A poor Service cannot be returned
• Strong Recovery strategies needed.
( Can you return a bad haircut?!! )
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• Consumers do not obtain ownership of services:
Deriving the value from the services without
obtaining the ownership of any tangible elements• Other People are often part of the Product:
The type of customers who patronize a particular
service business can influence the service experience.
Misbehavior of few customers should not be allowed
to spoil the good experience others.
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Consumer Evaluation
Processes for Services• Search Qualities
– attributes a consumer can determine prior to purchase of a product
– Ex: color, shape, size
• Experience Qualities
– attributes a consumer can determine after purchase (or during
consumption) of a product
– Ex: taste, wearability, ease of handling
• Credence Qualities
– characteristics that may be impossible to evaluate even after
purchase and consumption
– Ex: Surgery , Management and Technical consultancy
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Continuum of Evaluation
C l o
t h i n g
J e w
e l r y
F u
r n i t
u r e
H o u
s e
s
A
u t o m
o b i l e
s
R e
s t a u
r a n
t m
e a l s
V a
c a t i o
n s
H a
i r c u
t s
C h
i ld c a
r e
L e g
a l
s e r v
i c e s
R
o o t c
a n a l s
M e d
i c a
l d
i a g n o
s i s
Difficult to evaluateEasy to evaluate
{High in search
qualities
High in experience
qualities
High in credence
qualities
{ {
Most
Goods
Most
Services
Characteristics the buyer can evaluate…
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Traditional Marketing Mix
All elements within the control of the firm that
communicate the firm’s capabilities and image to
customers or that influence customer satisfactionwith the firm’s product and services:
– Product
– Price
– Place
– Promotion
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Expanded Mix for Services --
The 7 Ps
Product (offerings)
PricePlace
Promotion
People
ProcessPhysical Evidence
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SERVICE PRODUCT
A service product typically consists of the
core elements respond to the customers’ need
for a basic benefit, supplementary servicesfacilitate and enhance use of service.
C P d d S l
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Core Products and Supplementary
Services
• Most firms offer customers a package of benefits:
– core product (a good or a service)
– supplementary services that add value to the core• Supplementary services help to differentiate core
products and create competitive advantage by:
– facilitating use of the core service
– enhancing the value and appeal of the core
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Shostack’s Molecular Model of a Total
Market Entity – Hotel for a stay !
DistributionPrice
KEY
Tangible elements Intangible elements
Room
service
Vehicle
Stay in
a hotel
Parking
facility
Food
anddrink
Wake
up call
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PLACE AND TIME
Delivery Decisions: Where, When, and How
• Customer goes to the service provider (or intermediary)
• Service provider goes to the customer
• Interaction at arm’s length (via the Internet, telephone, fax, mail,
etc.)
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PROMOTION AND EDUCATION
Informing, Educating, Persuading, and Reminding
Customers
Marketing communication tools
– media elements (print, broadcast, outdoor,
retail, Internet, etc.)
– personal selling, customer service
– sales promotion
– publicity/PR– Viral Marketing
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PEOPLE
All human actors who play a part in
service delivery and thus influence
the buyer’s perceptions: namely,
•the firm's Personnel•the customer •and other customers
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PROCESS
The actual procedures, mechanisms and flow of activities by which
the service is delivered – the service delivery and operating systems
• Design of activity flows
• Number and sequence of actions for customers
• Role of contact personnel
• Role of technology, degree of automation
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Overnight Hotel Stay
SU
PPORTPROCESS
CO
NTACT
PERSON
(Back
Stage)(
OnStage)
CU
STOME
R
HotelExteriorParking
Cart forBags
DeskRegistrationPapersLobbyKey
ElevatorsHallwaysRoom
Cart forBags
RoomAmenitiesBath
Menu Delivery TrayFoodAppearance
Food
BillDeskLobbyHotelExteriorParking
Arrive
at
Hotel
Give Bags
to
Bellperson
Check inGo to
Room
Receive
Bags
Sleep
Shower
Call
Room
Service
Receive
FoodEat
Check out
and
Leave
Greet and
Take
Bags
Process
Registration
Deliver
Bags
Deliver
FoodProcess
Check Out
Take Bagsto Room
Take
FoodOrder
Registration
SystemPrepare
Food
Registration
System
PHYSICAL
EVIDENCE
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Physical Environment
The environment in which the service is delivered and wherethe firm and customer interact and any tangible componentsthat facilitates performance or communicationof the service
Create and maintaining physical appearances – buildings/landscaping
– interior design/furnishings
– vehicles/equipment
– staff grooming/clothing – sounds and smells
– other tangibles
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INDIAN COFFEE HOUSE CAFE COFFEE DAY
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Learning
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Productivity and Quality
• Productivity and quality must work hand in hand
• Improving productivity key to reducing costs
• Improving and maintaining quality essential for building customer satisfaction and loyalty
• Ideally, strategies should be sought to improve both
productivity and quality simultaneously—technology
often the key
