One of the major megatrends of recent years has been the phenomenal growth of services.

Today every business is a service business : you are not a chemical company, you are a chemical services business. In world economy today the contribution of various sectors is : Service Sector Industrial Sector Agriculture Sector : 65-% : 30-% : 5-%

In U.S. the contribution of service sector is 74-%. In India the contribution of various sectors is : Service Sector Industrial Sector Agriculture Sector : 56-% : 26-% : 18-%

The growth of service industries can be traced to the economic development of society and the socio-cultural changes that have accompanied it. Sometimes the growth of a specific service industry is the result of a combination of several reasons.
The major reasons for the growth of service industries are given below: 1. 2. 3. 4. 5. 6. 7. 8. Increasing affluence More leisure time Higher percentage of women in labor force Greater life expectancy Greater complexity of products Increasing complexity of life Greater concern about ecology and resource scarcity Increasing number of new products

Sectoral Growth in 2009-10 : ( % ) Insurance Internet Adv. : 40-% : 35-%

Organized Retailing : 35-% Live Entertainment : 20-% Therefore, with increasing importance of service sector, the marketing activities have assumed importance. In fact today many workers in the manufacturing sector computer operators etc. are really service providers. In a way, they makeup a Service Factory , providing services to the Goods Factory . We define a service as follows : A 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 . Increasingly, however, manufacturers, distributors, and retailers are providing value-added services, or simply excellent customer service, to differentiate themselves.

What should be classified as a service ? The answer isn t always apparent because invariably services are marketed in conjunction with goods. A company may sell a combination of goods and services. Therefore, it may be helpful to think of every product as a mix of goods and services located on a continuum ranging from mostly goods to mostly services. A Goods - Services Continuum (Categories of Service Mix) : (Mostly Goods) canned foods air travels ready made clothes automobiles draperies carpets restaurant meals repairs

insurance & teaching (Mostly Services).

The service component can be a minor or a major part of the total offering. We distinguish five categories of offerings : 1. 2. 3. 4. 5. Pure tangible good Tangible good with accompanying services Hybrid Major service with accompanying minor goods & services Pure service

For marketing purposes, it is useful to separate services into two categories. In the first are services that are the main purpose or object of a transaction rent a car from a company Hertz the company makes a car available (a tangible good), but what you are purchasing is accessibility to transportation a service. Because you are buying the use of the car, not the car itself, this is a service transaction. In the second category are services that support or facilitate the sale of good or another service. Thus, when you rent the car from Hertz, you can also obtain collision insurance, the use of a cellular phone, and an electronic navigational service. These are called supplementary or support services because you obtain them only in conjunction with renting the car. Scope of Services : Using a broad definition of transactions and customers, it is appropriate to recognize both for-profit and non-business services organizations. For profit services firms sell to consumers or other businesses with profitable operations as a primary goal in the following examples : Housing & other structures, household operations, recreation & entertainment, personal care, medical & health care, private education, professional business services, financial services, transportation, communication etc. Non business services organizations are of two types One type is not for profit (N-F-P) services organizations & has shown tremendous growth & the other for profit business Educational, cultural, religious, charitable &philanthropic, social concerns, professional & trade, social, health care, political.

Developing a Services Marketing Program : Marketing business & non-business services includes the same business elements as marketing goods. Whether its focus is goods or services, every organization should first define and analyze its markets, identify segments, & select targets - & then finally design a coordinated marketing mix around a differential advantage that will create the position the organization desires. However, some important differences between goods and services influence these marketing decisions the most important differences are : Intangibility Inseparability Variability

Perishability Ownership

Intangibility : Because of this, it is impossible for prospective customers to sample, feel, see, hear, taste or smell a service before they buy it. Consequently, a company s promotional program must be explicit about the benefits to be derived from the service, rather than emphasizing the service itself. The following promotional strategies may be used to suggest service benefits & reduce the effect of intangibility.

Therefore, the service provider s task is to manage the evidence to tangibilise the intangible . Visualization : e.g. carnival cruise lines depicts the benefits of its cruises with ads. that show people happy dancing, dining, playing games & visiting exotic places. Association : by connecting the service with a tangible good, person, object or place, a particular image can be created. Professional sports teams are linked with cities/regions to give them an identity. Merrill Lynch uses the symbol of a bull to imply strength & leadership. Physical Representation : LIC of India, uses the symbol of two hands protecting a diya to suggest security or protection. Documentation : there are two forms of documentation past performance & future capability. A hospital can document its past performance by pointing out in its ads., how many babies have been born & cared for in its obstetrics department. Another hospital may choose to stress its capability by highlighting the specialized equipment it has for any emergency during the delivery of a baby.

Websites are available tool in reducing the intangibility of a service. They make it possible for marketers to present extensive information, use animation and sound, & answer a site visitor s specific questions via e-mail. The web has increased the quantity & quality of available information and thereby improves the customer s understanding of the service. Suppose a bank wants to position itself as the fast bank, it could tangibilize this positioning strategy through a number of marketing tools. Place physical setting must connote quick service with clean exterior/interior & other things to show quick movement of People - sufficient no. of people to manage the work load efficiently Equipment - like computers, fax & copying machines. Communication material - like text & photos should suggest efficiency Symbols Price name & symbol should suggest fast service. the bank could advertise that it will deposit Rs100/- in the account of any customer who waits in line for more than five minutes. Inseparability : Services typically cannot be separated from the creator seller of the service. Moreover many services are created, dispensed & consumed simultaneously fast food drive-up window employee, a physical therapist, automatic teller machine. From marketing standpoint, inseparability limits distribution. When clients have strong provider preferences, price is raised to ration the preferred provider s limited time. Several means can be attempted to overcome this limitation :  To work with larger groups Can learn to work faster spend 30 minutes instead of 50 minutes with each patient & speed. business. and quickly.

Train people to do less important work themselves

Variability : Because they depend on who provides them and when & where they are provided, services are highly variable. Therefore to overcome this problem, service firms can take three steps toward quality control. Investing in good hiring & training procedures. Better trained personnel exhibits six characteristics - competence, courtesy, credibility, reliability, responsiveness & communication. Standardizing the service performance process throughout the organization. It is helped by preparing a service blueprint that depicts events & processes in a flowchart, with the objective of recognizing potential fail points. Monitoring customer satisfaction through suggestion & complaint systems, surveys & comparison.

Perishability :- It creates potential imbalances in supply and demand more so when the demand for many services fluctuates considerably by season, by day of the week, and by hour of the day. Perishability and the resulting difficulty of balancing supply with fluctuating demand poses promotion, product planning, scheduling and pricing challenges to services executives. Some organizations have developed new uses for idle capacity during off seasons e.g. during the summer, ski resorts operate their ski lifts for hikers & sight seers. Marketers have developed several strategies for producing a better match between demand & supply in a service business. On the demand side Differential pricing - will shift some demand from peak to off peak Non-peak demand can be cultivated. provide alternatives to waiting periods.

Complimentary services - can be developed during peak time to customers. Reservation systems On the supply side Pat-time employees can be hired to serve peak demand. are a way to manage the demand level.

Peak-time efficiency routines - can be introduced wherein perform only essential tasks during peak periods. Increased consumer participation - can be encouraged. Shared Services purchases. Facilities for future expansion can be developed , hospitals can share

employees

medical equipment

can be developed.

Ownership : Usually there is no transfer of ownership of anything in a service. There is no transfer of any tangible object as in product marketing. What is purchased by customers is just the use of, or access to the facility or service. The buyer does not become the owner of anything like in the case of buying a car, TV, fridge, etc.. In product marketing. Marketing Strategies for service firms : Traditional four Ps marketing approaches work well for goods, but additional elements require attention in service business three additional Ps for service marketing - People, Physical evidence, Process. Most services are provided by people the selection, training, & motivation of employees can make a huge difference in customer satisfaction exhibit competence, a caring attitude, responsiveness, initiative, problem solving ability and goodwill. Demonstrate service quality through physical evidence & presentation.

Service companies can choose among different processes to deliver their evidence restaurants developed different formats as cafeteria style, fast-food buffet & candle light service. In view of complex nature of service industry, service marketing requires not only external marketing but also internal and interactive marketing external marketing refers to the normal work to prepare, price, distribute and promote the service to customers. Internal marketing describes the work to train & motivate employees to serve customers well. Interactive marketing describes the employees skill in serving the client. Because the client judges service not only by its technical quality (e.g. was the surgery successful ?) but also by its functional quality (e.g. did the surgeon show concern and inspire confidence, service providers must deliver high touch as well as high tech. Service companies face three tasks :Increasing competitive differentiation Service quality & Productivity

Managing Differentiation : Service marketers frequently complain about the difficulty of differentiating their services. To the extent that customers view a service as fairly homogenous, they care less about the provider than the price. The alternative to price competition is to develop a Differentiated offer, Delivery or Image. Offer :- The offer can include innovative features. What the customer expects is called the primary service package, and to this can be added secondary service features. In the airline industry, various carriers have introduced such secondary service features, as movies, merchandise for sale, air-to-ground telephone service, frequent flier award programs & hotel industry providing computers, fax machines & e-mail etc. The major challenge is that most service innovations are easily copied, Still, the company that regularly introduces innovations will gain a succession of temporary advantages over competitors. Delivery : A service company can hire and train better people to deliver its service. It can develop a more attractive physical environment in which to deliver the service. It can design a superior delivery process. Image : Service companies can also differentiate their image through symbols and branding. American express is one of several highly branded service companies that have developed a successful international image. Managing Service Quality : A service firm may win by delivering consistently higher-quality service than competitors and exceeding customers expectations. The expectations are formed by their past experiences, word of mouth, and advertising. After receiving the service customers compare the perceived service with the expected service. There could be five determinants of service quality. These are presented in order of importance :Tangibles The company must define customer needs carefully in designing its service support program. Customers have three specific worries :1. 2. 3. They worry about reliability & failure frequency. Customers worry about downtime duration Customers worry about out-of-pocket costs of maintenance and repairs. Reliability Responsiveness Assurance Empathy

The buyers takes all these factors into consideration in choosing a vendor. The importance of reliability, service dependability & maintenance quality requirements differ from customer to customer & industry-to-industry. A manufacturer can offer & charge for product support services in different ways. 1. One company provides a standard offering plus a basic level of services. If the company wants additional services, it can pay extra or increase its annual purchases to a higher level. Many companies offer service contracts with variable lengths and different deductibles, so that customers can choose the service level they want beyond the basic service package.

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Companies need to plan product design and service-mix decisions in tandem. Design and quality assurance managers should be part of the new product development team. Good product design will reduce the amount of subsequent services needed. Post-sale Service Strategy : Most companies operate customer service departments whose quality varies greatly. Most companies progress through a series of stages. 1. Manufacturers usually start out by running their own parts and service department. In fact, many equipment manufacturers price their equipment low and compensate by changing high prices for parts and service. Over time, manufacturers switch more maintenance and repair service to authorized distributors & dealers as these intermediaries are close to customers, operate in more locations & can offer quicker service. Still later, independent service firms emerge offer a lower price or faster service. Ultimately, some large customers take over responsibility for handling their own maintenance & repair.

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Major Trends in Customer Service : 1. Equipment manufacturers are building more reliable and more easily fixable equipment shift from electro-mechanical equipment to electronic equipment having fewer breakdowns & is more easily repairable. Companies are adding modularity & disposability to facilitate self servicing. Customers are becoming more sophisticated about buying product support services and are pressing for services unbundling . They want separate prices for each service element & the right to select the elements they want. Customers dislike having to deal with a multitude of service providers handling different types of equipment. Some third party service organizations now service a greater range of equipment. Service contracts extended warranties in which sellers agree to provide free maintenance & repair services for a specified period of time at a specified contract price, may diminish in importance. . Customers service choices are increasing rapidly, & this is holding down prices & profits on service. Equipment manufacturers increasingly have to figure out how to make money on their equipment independent of service contracts.

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