Marketing Of Services

Unit – 1 : Introduction

Concept of Services
Services are intangible economic activities that provide value to consumers without
resulting in the ownership of a physical product. They are typically produced and consumed
simultaneously and are designed to meet the needs and expectations of customers.
Definitions:
 According to Philip Kotler:
"A service is any activity or benefit that one party can offer to another that is essentially
intangible and does not result in the ownership of anything."
Difference Between Product and Services Marketing

Basis Product Marketing Services Marketing

Nature Deals with tangible goods. Deals with intangible services.
Products can be seen, touched, Services cannot be seen or touched;
Tangibility
and stored. they are experienced.
Production & Products are produced first, Services are produced & consumed
Consumption stored, and later sold. simultaneously.
Products can be stored and Services cannot be stored; they
Perishability
used later. perish once the time passes.
Customer Limited involvement after High involvement during service
Involvement purchase. delivery (e.g., education, healthcare).
Ownership is transferred to the No ownership transfer; only access
Ownership
buyer. to benefits.
Focuses on product features, Focuses on customer relationships,
Marketing Focus
quality, packaging & branding. experience, and service quality.
Demand-based, experience-driven
Pricing Strategy Cost-based, competitive pricing.
pricing.
Distributed through physical
Delivered directly through service
Distribution stores, online platforms, or
providers (e.g., banks, salons, hospitals).
retailers.

Conclusion
Both product and services marketing require different strategies due to their inherent
differences. Services marketing emphasizes relationship-building, personalization, and
customer satisfaction, whereas product marketing focuses on physical attributes, branding,
and mass distribution.

Madhav Upadhyay
Characteristics of Services
Services have unique characteristics that distinguish them from physical goods. These
characteristics impact how services are marketed, delivered, and consumed.
1. Intangibility
 Services cannot be seen, touched, tasted, or stored before purchase.
 Customers rely on brand reputation, word of mouth, and past experiences to evaluate
a service
 Example: A doctor's consultation or a hotel stay is based on experience rather than a
tangible product.
2. Inseparability
 Services are produced and consumed at the same time.
 The provider and the customer must be present for the service to be delivered.
 Example: A teacher delivers a lecture while students receive it simultaneously.

3. Perishability
 Services cannot be stored for future use.
 If not utilized at the time of availability, the opportunity is lost (e.g., an empty airline
seat or an unsold hotel room).
4. Variability (Heterogeneity)
 Service quality can vary depending on the provider, customer interaction, location,
and situation.
 Ensuring consistency is a challenge in services marketing.
 Example: The same restaurant may provide different experiences on different days
due to staff performance or customer expectations.
5. Lack of Ownership
 Customers do not own the service; they only experience its benefits for a certain
period.
 Example: A Netflix subscription provides access to movies but does not grant
ownership.
6. Customer Involvement
 The customer is actively involved in the service process.
 Their behavior, preferences, and feedback can influence service delivery.
 Example: A customer’s interaction with a hairstylist impacts the final haircut result.

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Classification of Services
Services can be classified based on various factors, such as their nature, target audience,
and industry. Below are the key classifications of services:
1. Based on Market Segments :-
A. Consumer Services: These services are provided directly to individuals for personal
use. Examples: Healthcare, education, hospitality, retail banking, and beauty salons.
B. Business Services: These services help businesses operate efficiently.
Examples: Consulting, legal services, IT support, advertising, and logistics.
2. Based on Industry Type :-
A. Financial Services: Services related to banking, investment, and insurance.
Examples: Banking, stockbroking, insurance, and financial consulting.
B. Hospitality & Tourism Services: Services that cater to travel, accommodation, and
food industries. Examples: Hotels, restaurants, airlines, and travel agencies.
C. Healthcare Services: Services focused on medical and wellness care.
Examples: Hospitals, clinics, pharmacies, and telemedicine.
D. Educational Services: that provide learning and skill development.
Examples: Schools, universities, online learning platforms, and coaching centers.
E. Professional Services: Services requiring specialized knowledge and skills.
Examples: Legal services, accounting, architecture, and consulting.
3. Based on Service Delivery Mode :-
A. Online Services: Services delivered via the internet or digital platforms.
Examples: E-commerce, streaming services, and online education.
B. Offline Services: Traditional services that require physical interaction.
Examples: Hair salons, gyms, and in-person banking.
C. Hybrid Services: A combination of both online and offline services.
Examples: Banking (online transactions + physical branches).
4. Based on Government vs. Private Sector :-
A. Public Services: Services provided by the government for public welfare.
Examples: Public transportation, postal services, police, and healthcare.
B. Private Services: Services offered by private businesses for profit.
Examples: Private hospitals, private banks, luxury resorts.

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Paradigms in Services Marketing
A paradigm in services marketing refers to a framework or model that guides how
businesses understand, design, and deliver services to customers. The evolution of
paradigms in services marketing reflects changing customer expectations and technological
advancements. Businesses must adopt the right paradigm based on their industry and
customer needs to stay competitive in the market
1. Traditional Marketing Paradigm
 Focuses on the 4Ps of Marketing:
1. Product – The core service offering.
2. Price – The cost customers pay for the service.
3. Place – How the service is delivered (online, physical location, etc.).
4. Promotion – Advertising, sales, and marketing efforts to attract customers.
 This paradigm was originally developed for tangible products but later adapted for
services.
2. Extended Services Marketing Paradigm (7Ps Model)
 Since services are intangible, the traditional 4Ps model was expanded to include:
5. People – Employees and customers involved in service delivery.
6. Process – The systems and procedures that ensure service efficiency.
7. Physical Evidence – Tangible aspects like branding and customer experience.
 This paradigm is widely used in modern service marketing strategies.
3. Relationship Marketing Paradigm
 Focuses on building long-term customer relationships rather than one-time
transactions.
 Uses CRM (Customer Relationship Management) tools to analyze customer behavior
and preferences.
 Examples: Loyalty programs in airlines and hotels (frequent flyer miles, membership
rewards).
4. Experiential Marketing Paradigm
 Services are experiential in nature, meaning customer perception and satisfaction
depends on their experience.
 Focuses on creating memorable experiences rather than just offering a service.
 Example: Starbucks creates a premium coffee experience with ambiance, music, and
customer engagement rather than just selling coffee.
5. Sustainability & Ethical Marketing Paradigm
 Focuses on social responsibility and sustainability in services.
 Businesses market themselves as eco-friendly, ethical, and socially responsible.
 Example: Companies like Tesla promote green energy solutions as part of their
services.

Madhav Upadhyay