S ervices

M arketing

Growth or Services Sector

Reasons:The physiological need of the people get fulfilled, there is a

demand for more satisfaction.
The changing lifestyle, changing word, changing economies, technological
advances modernization, liberalization, privatization & globalization polices
are same of the factors for stimulating the dramatic growth in services.

Growth of services industry : Cause & effect.

Cause

Effect

Illustrations

Technological
Advances

High complexity of
products

Maintaince Services eg:AMCs for

computers, services center for
cellular phones .

Globalization

More business
internationalization

International shipping & Couriers

Company

De regulation
police

Privatization of Govt.
owned sectors

Telecom & internet services birth of

Pvt. Airlines

More leisure
time

Shift toward pleasure

& entertainment

Resorts recreation clubs tour

operators multipliers etc.

Greater life
expectectancy

To live long special

care facilities

Health club & Five Star hospital have

flourished

Service need product as consequence

Service need

Product as consequence

Age (old age Care) Senior citizen home, wheel Chairs

Eye care

Eye career glasses , eye testing machine

Hospital

Medical equipment , medicines etc.

Photography

Cameras, video, cameras films.

Education

Aids likes OHP LCD projector etc.

Copyright service

Fax machine, photo copies

Hair styling

Hair coloring, shaping, fixing produce & hair dryer.

Classification / Type of service :

Service can be classified broadly as followsTransportation Service railway, airline water, road.
Communication Service telephone, post, & courier tele & video
conferencing, radio, television.
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1.
2.
3.
4.

Marketing related service advertising sale promotion, products

development & testing, market research etc.
Financial & insurance service banking leasing, brokerage, life and
health insurance.
Entertainment service movies channel, cinema, game parlors.
Hospitability services hotels & restaurants catering & home delivery.

Scope of good and services:

Good is get tangible physical attribute assembled in an identifiable from

to provide want satisfaction to customers.

Services is an identifiable, intangible activity that is the main object of

transaction designed to provide that want satisfaction to customer.
Service profit seeking organization
Industries Classification

Example

Medical & health care

Diagnostic services, hospitalization nursing & all

other medical related service.

Communication

Telephone fax, e mail, internet

Transportation

Private state transport.

Recreation & entertainment

Amusement parks, cinema halls, DJ service etc.

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Growth & importance of services

Growth of service industries:-can be attributed to the changing life

style, changing word, changing industrial economies, changing
population & changing technology.
There is drastic change in the industrial & business environment
because of two vital components ie services a information technology.
Open market economy has integrated India with the world economy &
currently the services sector of India accounts for over 40% its GDP.
In India the service industries is highly employee oriented and heavily
overstaffed & organization like bank insurance companies etc are
dominated by procedures rather than services of customers.

Importance of service marketing

Most services marketing involves some good and there is explosive
growth in service industry an account of increased complexity specially
and competitive nature of business.

Service & Marketing environment

the pest impact
Political legal forces

Economic Condition

Pest Impact

Technology

Socio cultural Forces

Pest exert same pressure on service. As it does on products. Pest is

useful tool for helping us to decide what the key factor in the marketing
environment are for a particular organization whether their impact is
opportunity or that.

Good-services continuum :
Today, no tangible goods are offered to a customer without same
associated service.
No services is marketed without same physical goods associated with
product.

India has the second fastest growing services sector with its compound annual growth
rate at nine per cent, just below Chinas 10.9 per cent, during the last 11-year period
from 2001 to 2012, the Economic Survey for 2013-14 said. Russia at 5.4 per cent is a
distant third.
Among the world's top 15 countries in terms of GDP, India ranked 10th in terms of
overall GDP and 12th in terms of services GDP in 2012, it said, adding that services
share in world GDP was 65.9 per cent but its share in employment was only 44 per cent
in 2012.
As per the survey, in India, the growth of services-sector GDP has been higher than that
of overall GDP between the period FY2001- FY2014. Services constitute a major portion
of Indias GDP with a 57 per cent share in GDP at factor cost (at current prices) in 201314, an increase of 6 percentage points over 2000-01

They study of goods Services = Continuum facilitates marketers to

know and plan their market offering.
Restaurants for example are services oriented & provide tangible goods
like DOSA, PIZZA or Mughlu Foods.
In the same way computer manufacturing firm sell hardware but major
part of the profit come from maintenance contracts or software
solutions ( a services ) e.g.: IBMs Focus is providing Solution to the
small Planet.
Planet
Exercise equipment as an example of goods Service Continuum.
An exercise equipment say a stationary bicycle can be:A). When a user buy it and obtains its ownership it is called Pure
Goods.
B). If a customer procures it on rent he or she obtains the use of the
product temporarily.
C). If a hotel gust uses the same at hotels health club we call it the gym
facilities.
D). If a person uses it at a fitness club it is not only the bicycle, the
space of the club also the service of the instructor that are clubbed and
there is how the continuum concept can be under staed.

4 Is Services

There are 4 distinctive Characteristic of service which

create special marketing challenges and opportunities
these 4 element are called as:1. Intangibility
2. Inseparability
3. Inconsistency
4. Inventory
Services marketers must cope up with the above
characteristic and devise marketing strategies So that the
related marketing problems are overcome.
1. Intangibility :
Intangibility is a characteristic of service indicating that it is
has no physical attributes & as a result impossible for a
customer to test, feel or smell before buying it thus in
most cases services are bought on trust.

Services product are mostly intangibility, they have to be marketed with

tangible evidence. This is referred to as tangiblizing the intangibles. This
means that the services has been performed and delivered at particular
level of quality
Eg- 1) University degree is a tangible evidence of the education services
and knowledge acquired by you.
2) certificate issued a pollution control agency is a tangible evidence of
the required checks done on the vehicle prove that emission levels are
under control.

2. Inconsistency
Inconsistency is characteristic of services that makes them less
standardized & uniform than goods inconsistency is called as
variability
The consistency occurs largely on account of
Different services provides perform a given services at different
occasions.
The services performed by an individual provider may differ overtime.
Interaction b/n customer and provider may vary by customer, companies
which are highly equipment & system based & less people based on
reduce insistency in services.
Eg- 1) Bank ATM provides consistent services.

2) Mc Donalds have been able to achieve consistency in services

delivery by adopting production line approach to services and
standardizing every aspect of services operation down to the width of
the smile that each customer should be greeted with.

3. Inseparability
Inseparability is characteristic of services. Including that it cannot be
separated from the creator seller of the product
Many services are created delivered & consumed simultaneously
through interaction b/n customer and services product e.g.- dental care
by a dentist.
In most of the case the customer receives and consumes the services
at the service producer premises, so called the services factory.
Type of services production: Co production ( tutoring services both student & faculty are present.)
Isolated production (movie production / processing center)

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Self services (customer use equipment & services provided by the seller
without direct interaction e.g.videogame machine and bank ATM )

4. Inventory
The inventory relates to perishability Characteristics in services
marketing . The services cannot be easily saved stored for the future
use.
e.g. empty seat in a 10 am flight to Mumbai from Delhi cannot be
carried over to provide more seating in next flight.
The combination of perishability & Fluctuating demand present
challenges for marketers engaged in product planning, pricing,
promotion, distribution of services.
A). Restaurants offer Happy Hour rates to invite customer for easily
dinner hours.
B). Mc Donald use part time employee (contester person ) to mid the
peak hour rush.

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Goods VS Services: At A Glance

Characteristic

Goods

Services

Product

Tangible

Intangible

Ability to measure

Objective

Subjective

Custo perception

Standardized

Must be can summed to evaluate

Form

Manufacturing

Created

Self life

Days to year

Zero (perishable)

Delivery

Consistent

Variable

Product flexibility

Limited

Broad

Marketing

Traditional / External

Non traditional largely internal

Marketing Mix
What is marketing mix?
Marketing mix describe the specific combination of marketing
elements used to achieve an organization / individuals objectives
and satisfy the target market.
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Marketing Mix

It is customary to accept that marketing mix is made up of 4 Ps

Product, Price, Promotion, Place (Distribution)
Over a period of time the special need of services have led to the
extension of the mix to 7 Ps . The additional 3 Ps listed below are
known as augmented service mix.
1). People 2). Physical evidence 3). Process
People

Process

Physical evidence

Extended services marketing mix (augmented marketing mix)

The above additional 3Ps help services manager to deal with the 4Is
of services.
Marketing a services is no different from marketing a product but the
4Is make it more complex and difficult because
a). Customer perceive much higher risk while buying services
b). Customer is on your premises so customer care becomes the focus.

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Inconsistency in quality
Restaurant
Intangibility

Inseparability

Inconsistency

Inventory

Rating

P/ Services

Time/responsibility

Seat

Cinema Hall
Intangibility

Inseparability

Inconsistency

Inventory

Tkt/ People +P

Tkt / Physical Evid.

Sound-Pic clearity
/ Peo+ Process

Physical Evid.

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Target Market

For certain succeful marketing mix strategy market must define the
target market very clearly.
The target market is of paramount importance and is the focus for all
marketing mix activity.

Benefit of targeting:1. fuller knowledge and understaing of the unique characteristic and need of
the group to be satisfied.
2. Better knowledge and understaing of who your competitors are
3. Better knowledge and understaning of change and development in the
wants and demands of the target market.

Segmentation
Age

Gender
Demographic
income
What do customer buy?
Customer by solution their problems. Customer have a set of need and
wants which will satisfy their need. Thus one can say customer are
searching for benefits.

Customer choose on the basis for value of money criteria and not price alone.
Customer services user and the clients are wall motivated to find offering which
give them the most benefit / value for the least out you.
The value for money is given by the following equation
Value = Product / promotion / place / Process / Physical Evid
Money
Price
= Non- Price variable / Price

6 Ps add to the perceived value and the 7th P (Price) Brings the revenue.
The image of the services its availability functionality reliability customer care,
friendly services /delivery system contribute to the satisfaction of customer.

People: Organizational structure may be defined a set of assumption or ideologies shared

by the member of the organization.
People are these assumptions to identify what is important and how things works in
the company.
When these assumptions get formalization roles of behavior are established so that
people know how to act.

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Service Encounter

For service marketers the core of the service elements is the interation
between providing services & the customer which is known as the service
encounter.
To deliver satisfactory service of the company employees have to play an
important role and poises personal qualities & ability to understand &
satisfy customer needs flexibility skill & knowledge.
The management in order to deliver satisfactory service must develop job
to satisfy the individual needs of the employees and address the
following issues:A) Employee:- employees are the impression managers becomes a
customer perceives the quality of the service from the appearance inter
personal behavior attitude of the contract personal.
Like investing resoures in improving the product companies must invest
in recruiting right people. Training them to deliver the satisfaction &
motivate them to retain the customers.
B). Recruitments:- for recruiting right type of people a criteria should be
laid down to reflect the human dimensions of the job as well as technical
requirement. E.g.- Pizza Hut, mission Enjoy having fun while delivering
word wide standards of service & hospitality.
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C). Training & Development :- Training is the process of providing the

employee with specific skill in helping them correct deficiencies in their
current performance.
Development is the process of providing the employee with the experience
and attitude needed for success E.g.-Radisson hotel which trains employee
on 3 principles.
1) Show yes I can Attitude.
2) Take personal responsibility
3) Use teamwork.
D) Motivation :- Motivation is a set of foreces that cause the employees to
behave in certain ways. However it is important to know that really
motivates peoples.
Along with financial incentive phycholigical reward like price & recognition
are often more powerful and long lasting reward than more money.
Most service organizations use a combination approach to motivation
Monetary awarded may be granted for an outstanding services and call for
employee participation through inviting ideas to important.
E) Empowerment :- In the past front live employee views and opinions
were not recognized however now management have started giving
employee more information & knowledge reward based on company
performance and most important the power to take decisions.
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Empowerment is a choice of 3 options based amount of knowledge

information reward and power.
1) Suggestion involvement employees are only empowerment to
recommend and power.
2) Job involvement This call for extensive job redesign so that
employee use a variety of skills often in teams because in services
organization like hospital and airline individual can not offer the whole
services from beginning to end.
3) High Involvement employee through job enrichment develop
extensive skill in teamwork problem solving and business operations.
There is profit shearing and the employees feel a sense of ownership.
D) Process & Services Quality: -Process is the way of understanding
transaction, supplying, information and providing service in the way
which is acceptable to the customer and effective to the organization.
Services are rendered and expericed simultaneously and the process
through which consumers have interaction with the service provider is
of paramount importance e.g.- the use to credit card, booking system
for the transport and accommodation.
The process design has to maintain a balance b/n functionality, security
aesthetics and the case of use by the customer.

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Services Quality

The dimension of quality.

To develop design produce or deliver a product or services we must look
into the dimension of quality.
Garvin process 8 dimension of quality for products.
1) Performance On the core product primary operating characteristic for
e.g.- sound, pasture, clarity in a television, cleaning abilities of a soap or
detergent.
2) Feature Secondary characteristic which augment the basic function.
e.g. surround sound remote facility.
3) Reliability Probability of product breaking down. e.g. refrigerator,
washing machine.
4) Conformance The degree to which a products design and operating
characteristic mach standards e.g.- ISI Mark, or ISO standards.
5) Durability How long a product continues to be useful lie life of a
product.
6) Serviceability The speed and come tence with which it can be
repaired and the courtesy factor.
7) Aesthetics How to product look, feel sound tastes smells ( appeal of a
product to
8) Perceived image reputation brand name are in direct measure which
customer use when comparing product.

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The PZB Model (Parasuram, Ziethaml, Berry)

The model identifies 5 gaps that can cause unsuccessful services delivery

Gap 1 Gap between customer expectation and Management

perception e.g.-newspaper in hotel room.

Gap 2 Gap between management perception and services quality

specification. Management lacks commitment or vision to adopt certain
standard e.g.- a star hotel has to keep certain standard.

Gap 3 Gap between services quality specification and services

delivery this is essentially on account of ill trained employee.

Gap 4 Unrealistic expectation gap between services delivery and

external communication.

Gap 5 Services gap this gap between perceived service and deliver
services.

Product
One of the basic difficulties in marketing particularly services marketing
is product formation ie deciding what service product actually is , and how
it should be marked.
1) Service Product 2) Feature and benefits
3) Quality Level
4) Guarantees

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6) Range

7) Brand Name

Service Offer The mix ingredients should be so planed that the customer
has to believe that product / service offers added value in order for it to be
successful.
Services Product
The term Product is defined as bundle of attributes capable of exchange
or use usually a mix of tangible and intangible forms. It may be an idea,
physical, entity on a service or combination of the 3.
The service product is concerned with creating levels of service to be
offered the following quotation need to be answered by the service
providers.
Q.1* How much of the services should the dient be expected to perform?
Q.2* How much should be provided by the staff ? e.g.-Self service of food
in restaurants offering buffer lunches is an acceptable practice.
E.g.- Carrying of hand luggage by the customer and managing clock in
baggage by airline staff is the practice.
Quality Levels Deciding on quality standard and its implementation and
performance level of the staff decide the quality level of the services. 5
Stares of quality.
1) Reliability
2) Assurance

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3) Tangible
4) Empathy
5) Responsiveness
The ward RATER can be used to remember the core aspect of service
quality.
Range (variety) The customer decision to buy a product is potentially
influenced by 1) Range 2) Style , Presentation of product.
Thus manufacturing and services organizations offer a variety of
different products and service normally referred to as product line
product Mix.
Feature and Benefit Marketer know that consumers buy a product for
the benefits they delivers.
It is imperative for the marketers to understand how customers organize
information about service perceive the quality and value of the service.
Value added service are perceived by customers a increasing the
benefit they are receiving. These benefit can take a number of different
forms. e.g.-1).Hotel Faster check in and check-out services. Free use
of health club. 2).Restaurant special menu for children, price discount
for seniors citizens.
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Brand Service customers do not switch brand frequently as

compared to while switching products.
Services firms like hotels and airline aim to achieve zero defection by
providing pro-active services.

Brand Name A brand name which is well know and associated with
high satisfaction level adds value of the service product and makes
customer less price sensitive. e.g.- Taj hotel, citi bank, LIC.

Brand of service Marketers goal should be creating a good brand

image and the strategy to achieve the goal is to develop a theme in
totality.
The following tacts may be used in implementing the strategy.
Include a tangible goods as part of the brand image. E.g.- LIC lamp
between two hands, Welcome group - folded hands.

Service Guarantee Tool of value addition

For the firm to become a value added business firm it must develop a
reputation of service guarantee. 1).Unconditional 2). Easy to
understand and communication 3). Meaningful 4). Easy to invoke 5).
Quick and easy to collect.
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Services development is different why ?

New services development faces the following challenges.

Services are intangible experiences
Services customers want individual experiences.
Services are product and consumed at the same time.
Services quality is imperative yet highly invariable.

Physical Evidence
Customer judge services quality thought the physical evidence.
The physical evidence is defined as the environment in which the
services is delivered and where the firm and customer in tract and any
tangible commodities that facilitate performance or communicate the
services.
It plays a role a enhancing customer perception of the service quality.
How important is the physical evidence for essel world or Appu Ghar
He bright colorful neon sign displays, the music and fantastic rides,
reinforce the perception of the people about the fun and excitement, they
expect from the visit to these park.
They communicate the environment in which the services to being
delivered.

Physical evidence from customer point

view
Services

Physical facilities

Other benefits tangible

Airline

lounge & airplane interiors

Ticket & Boarding

Theme Park

Gate, Area rides lighting &

Signage

Ticket & brochures

Insurance
Speed Post

Policy document & Boucher

Post Office

Uniforms & rehides

Summery
Marketers tangible the intangible of service by providing the physical
evidence.
The physical element for a hotel include exterior elevation of building.
Interior facilities like furniture dcor ambience to attract customers
and give them physical evidence for communicating service quality
attributes and build trust.
Customer evaluate the service initially though physical evidence
before purchase and the other tangible provide satisfaction during
use the services.

Place ( Distribution)
The place or distribution of service refer to availability of a service ie
when & where it can be purchase (rail/w)
Service product are mostly those where no transfer of ownership take
place & the service is simply rented or consumed.
But it is essential that it must be available and accessible before it
consumption, hence this needs a distribution system.
1) Location
4) Distribution facility
2) Accessibility
5) Service inventory
3) Channel of distribution 6) Managing Channel
1) Location location involving considering where to deliver the service of
the customer and whether the service organization, should be single
location
L

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