Goods Objects, Devices,

Things
Services Deeds, Efforts,
Performances
Powerful
forces
transforming the service
economy
The hollowing out effectThe shift in employment
patterns in industrialised
countries. E.g. outsourcing
Deregulation
and
privatisation- Privatization:
Government
controlled
services such as health and
tollways sold or leased to
private sector operators
Social
changesMore
affluent consumers demand
more and better services. E.g.
Internet based enterprises
provide a host of new
services
Professional services and
franchises - Government and
legal pressure has forced
service
associations
to
remove or relax bans on
advertising and promotional
activities. E.g. Lawyers,
doctors, architects.
Services Defined
1.Any act, performance or
experience that
one
party can offer to another
2.Services are essentially
intangible.
3.Service businesses offer
processes
(economic
activities) that provide time,
place, form, problem solving
or experiential value to the
receiver.
4.A service is something that
may be bought or sold, but
cannot be dropped on your
foot.
An expanded marketing
mix for services (4Ps to
7Ps)
5. People: direct, personal
interaction
between
customers and the firms
personnel or employees for
the
service
to
be
manufactured and delivered.
6. Physical evidence (tangible
cues): servicescape such as
physical layout of the service
facility,
ambience,
background music, seating
comfort etc.
7.
Process
of
service
production:
required
to
manufacture and deliver the
service.
Services Characteristics
1. Intangibility
2. Inseparability
3. Heterogeneity

Overcoming the challenges

Use of tangible clues
Use personal sources of
information
Creation of strong
organizational image
Marketing Problems caused
by inseparability
1.Physical connection
between service provider and
service receiver
2.Involvement of customers
in the production process
3.Involvement of other
customers in the production
process 4.Challenges of mass
production
Overcoming the challenges
of inseparability
Emphasis on selecting &
training public contact
personnel
Consumer management
Use of multisite locations
Marketing Problems caused
by heterogeneity
Difficult to achieve
standardization
Difficult to achieve quality
control
Mood of the service providers
Marketing challenges of
perishability
Higher demand than
maximum available supply
Higher demand than optimal
supply
Lower demand than supply
Possible solutions to
perishability problems
Demand strategy: creative
pricing
Demand strategy:
Reservation system
Development of
complementary services
Development of non-peak
demand
Part-time employment
utilization
Capacity sharing
Advanced preparation for
expansion
Utilization of third parties
Increase in customer
participation

The three-step process

consumers use to make
purchase decisions:
The pre-purchase stage
The consumption stage &
The post-purchase evaluation
stage
Pre-purchase stage:
The stimulus: The thought,
action or motivation that
incites a person to consider a
purchase.
The stimulus may beA commercial cue
A social cue
A physical cues
Problem awareness: In
which consumers determines
whether a need exists for the
product
Shortage : The consumers not
having that product or
services, or
Unfulfilled desire:
Consumers dissatisfaction
with a current product or
services.
Information search: The
consumers collects
information on possible
alternatives.
Internal sources
External sources
Evaluation of Alternatives:
Once relevant information
has been collected, the
consumers arrive at a set of
alternative solutions to the
recognised problems.
Non-systematic evaluation
Systematic evaluation
The Consumption Stage
The stage of consumer
decision process in which the
consumer purchases and uses
the product or services.
Store choice
Non-store choice
2.Buying
3.Using
4.Disposing
The Post-purchase
Evaluation stage
During which consumers
determines whether the
correct purchase decision was
made.
Cognitive dissonance : doubt
in consumers mind regarding
the correctness of the
purchase decision.
Considering Factors in
Decision Making Stages
Pre-purchase Stage
Considerations
Consumption Stage
Considerations
Post-choice considerations

4. Perishability
Marketing Problems caused
by intangibility
Lack of ability to be stored
Lack of protection by patents
Difficult in displaying or
communication
Difficult in pricing

Manager: A person who has

decision making power to
select
an
option
or
alternatives out of a number
of options or alternative is
called manager.
Economics: Economics is a
science, because results of
economic
variables
are
known which is treated as
universally truth
Human behavior is always
rational.
People who are rational they
are divided into 3 groups:
Producer: Rational behavior
of producer is to maximize
profit.
Consumer:
Rational
behavior of consumer is to
maximize utility through
consumption of output.
Government: Govt wants to
stay the power.
Increase total output of
country: People become
happy when they get more
utility through consumption
of more and more output.If
output increase people will
get more output and get more
utility and they will keep govt
in power.Thats why govt
increase output.
Increase total employment:
Employment create income,
income create demand , and
demand brings output to
people, people can consume
output and increase your
utility.
Stabilize the price: People
are psychic in nature. People
can not tolerate unstable price
even if their buying power
and consumption increase.
Output: Output is anything
which gives utility at the time
of consumption.
Utility: Is kind of satisfaction
that comes from consumption
of output.
Consumtion: Eat, drink or
use.
Output: Goods and services.
Marginal Utility: Utility that
comes from an additional unit
of consumption of an output.
Utility that comes from the
last unit of consumption of
output.
Law
of
diminishing
Marginal
Utility:
If
consumption
increase
marginal utility decrease.
Stable price: Price that does
not affect the mind of the
people.

Factor in which demand

depend:
Own price (P0)
Price of substitute (PS)
Income
Taste
Etc.
Demand: If X have money
and X willing to pay for that
then its called demand.
Checking Demand: Desire
ability to buy, willing to pay.
Law of demand: If price is
increase demand decrease and
voice versa, provided other
things remain constant.
Substitute Goods: Two
goods are said to be substitute
goods if increase in price of
one of them then increase in
demand for other. Ec= +ve
Complementary good :
Two goods are said to be
complementary goods if
increase in price of one of
them caused decrease in
demand for other.
Normal Good: A good is
said to be normal good if
increase in income causes
increase in demand.
Inferior good : A good is
said to be inferior good if
increasing
income cause
decrease in demand.