CHAPTER 1

INTRODUCTION TO SERVICE MARKETING

- Priyanka Nair

What are services?

A service can be defined as, all the economic
activities whose output is not physical product
or construction, is generally consumed at the
time is produced, and provides added value in
forms (such as convenience, amusement,
timeliness, comfort or health) that are
essentially intangible concerns of its first
purchaser.
Characteristics of services when compared to
goods are as follows:
1.
2.
3.
4.

Intangibility
Perishability
Inseparability
Heterogeneity

Service as company, products, customer service and

derived service
Service as companies: includes industries and companies whose core
product is a service. Some of the e.g. are Taj Palace Hotels, Birla Sun
Life etc.
Service as products: represents a wide range of intangible product
offerings that customers value and pay for in the marketplace.
Service as customer service: Normally customer service is not
chargeable but it adds on lot on quality in the service delivery. A
customer service can occur on- site or off-site.
Service as derived service: here it is believed that the physical goods
are actually providing services. For e.g. a medicine is giving medical
services, razor is providing barbering services.

Service & Technology

Think how dramatically different our world would be without basic
technology services.
1. POTENTIAL FOR NEW SERVICES: Many improved services were
developed because of the technology such as fax machine, ATMs,
automated voice mails etc. because of internet many companies are
now providing creative services and many cars now have an installed
road mapping services which not only guides a person onto a correct
route but also suggests whether there are hotels or restaurant nearby.
2. NEW WAYS TO DELIVER SERVICES: There was a time when the
companies used to give face-to-face services or by telephone. But with
the technological advancement now its been shifted to internet based
or wireless services. Services like bill payment, ticket booking,
reservations are now easily done at a mouse click.

Service & Technology

3. ENABLING BOTH CUSTOMERS &
EMPLOYEES: Technology enables both
customer and employees in getting
and giving services. It specially helps a
customer to serve themselves more
effectively. For e.g. online banking
helps a customer to access their bank
accounts, check balances, transfer the
funds, make payments, apply for loans
etc without taking the pain to travel
and investing time.
4. EXTENDING THE GLOBAL REACH OF
SERVICES:
Technology
specially
Internet itself knows no boundaries.
Many companies who work globally are
able to be easily in touch with their
employees
and
customer.
Many
employees work virtually too.

The Paradox & Dark Side of Technology

Customers privacy and confidentiality- a major issue

Many customers not eager to interact with company through internet
Resistance to change
Fear of getting eliminated from job due to technology
Quality of life- negative effects on children
Technology may take a long time to create customer satisfaction due
to lower usage of customers.

Service Marketing Triangle

According to Philip Kotler,
service marketing requires
both external marketing and
internal as well as interactive
marketing. The three types
of marketing in service
industries are shown in the
following figure. The right
side of the triangle shows
the
external
marketing
(setting promises). It is the
normal activity of the firm to
develop price, promote and
distribute
the
service
offering to the customers.
Any
thing
that
is
communicated
to
the
customer
before
service
delivery is seen as a part of
external marketing.

Service Marketing Triangle

The left side of the triangle
shows the internal marketing
(enabling the promise). The
internal marketing activities of
the firm are to train and
motivate its employees to work
as a team in order to deliver the
service. It emphasis on the
critical role that enables the
employees to keep the promises
made to the customer.
The bottom part of the triangle
describes the employees skill in
handling customer contact. It is
the real time marketing of
moments of truth where the
employees directly interact with
the customer in order to fulfill
the promise.

7 Ps Of Service Marketing

Product
Price
Place
Promotion
People
Physical evidence
Process

SERVICES POSE DISTINCTIVE MARKETING CHALLENGES

CUSTOMERS DO NOT OBTAIN OWNERSHIP OF SERVICES : they derive value

without obtaining ownership of any tangible elements. For e.g. car rental services.

SERVICE PRODUCTS ARE EPHEMERAL AND CANNOT BE INVENTORIED:

services are perishable in nature

INTANGIBLE ELEMENTS DOMINATE VALUE CREATION: elements like skilled

workforce dominate in value creation

CUSTOMERS MAY BE INVOLVED IN THE PRODUCTION PROCESS: for e.g. in

hospitals, education, hotels etc.

OTHER PEOPLE ARE OFTEN PART OF THE PRODUCT: people who serve the
customers, audience in sports stadium etc.

THERE IS GREATER VARIABILITY IN OPERATIONAL INPUTS & OUTPUTS:

standardization of services is very difficult, no matter however strong the input is,
output differs

SERVICES POSE DISTINCTIVE MARKETING CHALLENGES

MANY SERVICES ARE DIFFICULT FOR CUSTOMERS TO EVALUATE

THE TIME FACTOR ASSUMES GREAT IMPORTANCE

DISTRIBUTION CHANNELS TAKE DIFFERENT FORMS

CLASSIFICATION OF SERVICES
PEOPLE PROCESSING: here the presence of people for availing
services are very important. They should be prepared to spend time
interacting and actively cooperating with the service provider.
POSSESSION PROCESSING: often, customers ask a service
organizations to provide treatment to a physical possessions which
could be anything from a house to a computer or even a dog.
MENTAL STIMULUS PROCESSING: services that interact with peoples
mind including education, news and information, professional advice,
psychotherapy, entertainment and certain religious practices. Anything
touching peoples mind has the power to shape attitudes and influence
behavior.
INFORMATION PROCESSING: information is the most intangible form
of service output but may be transferred into more enduring and
tangible forms like books, tapes or disks