SERVICES

MARKETING
MODULE 8
TELL ME ABOUT
YOUR DAY.
A L L T H A T Y O U H AV E D O N E S I N C E
MORNING
SERVICES DEFINED

• “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” (Kotler, 2004)

3
WHY SERVICES MARKETING IS
IMPORTANT

• Services dominate economy in most nations

• Importance of service sector in economies is growing rapidly:
– Services account for more than 60 percent of GDP worldwide (65-80% of developed countries GDP)
– Almost all economies have a substantial service sector
– In India, Services contribute 58% of GDP, Industry 24% and Agriculture 18%
• Huge contribution to employment level in India
• Provide a competitive edge to the product – for example Rolls Royce, IBM

Most of you will get jobs in the service industry

 INDUSTRIES CLASSIFIED UNDER THE SERVICE
SECTOR
• Transportation – Airline, water, rail and road transportation
• Logistics
• Education – Schools, colleges, tutorials, self improvement courses
• Health services – Hospitals, Consultations, labs
• Legal services
• Banking, investment services, insurance, accounting and tax services
• Communication – Telephone, mobile, post and telegraph
• Food and lodging – Hotels, restaurants, resorts
• Consultancy, Market research, Advertising
• Media – Radio and Television broadcasting, Advertising
• Maintenance and repair of equipment,
• Household services,eg pest control
• Courier
• Entertainment – Theatres, motion pictures, theme parks
• IT – Internet, software and IT enabled services
• Beauty – Salons, spas
• Public Utilities – Electricity, water, sanitation
• Military, police services
• Time sharing
• Internet ,online shopping
DISCUSS THE
REASONS FOR
GROWTH OF
SERVICE
INDUSTRY
REASONS FOR GROWTH OF
SERVICE SECTOR
• Affluence..
• Leisure time..
• Life expectancy..
• Working women..
• Product complexity..
• Life’s complexity..
• New products..

8
W H AT A R E T H E R E A S O N S
THE SERVICE INDUSTRY
I S C H A N G I N G S O R A P I D LY
• Govt Policies
• Social changes
• Globalisation
• But the most dramatic is IT and communications
– Innovations in big data, cloud computing, user generated content, mobile communications, AI and
apps
LETS DISCUSS
ROLLS ROYCE.
GET INTO
GROUPS.
Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7

1,8,15,22, 2,9,16,23 3,10,17.24 4,11,18,25 5,12,19, 26 6,13,20,27 7,14,21,

28
29,36,43, 30,37,44 31,38,45 32,39,46 33,40,47 34,41,48 35,42,49

50, 57, 64, 51,58,65,72 52,59, 66, 53,60,67, 54,61,68 55,62,69 56,63,70
71
 GOODS VS. SERVICES
Goods Services
Tangible Intangible
Homogenous Heterogenous/variable
Production & distribution are Production, distribution &
separated from consumption consumption happen
simultaneously/perishable
/cannot be stored
A thing An activity or a process
Core value is produced in a Core value is produced in
factory buyer – seller
interactions/inseparable
14
SERVICES – PRESENT IN ALL INDUSTRIES

“There are no such thing as service industries. There are only industries whose
service components are greater or less than those of other industries.
Everybody is in service.” -Theodore Levitt-

regardless of the “product”, there is a services component to the offerings of all

firms

core service

supplementary services
GOODS AND SERVICES CONTINUUM

• Products are a combination of tangible and intangible aspects – so products are a combination
of goods and services.
• Products can be classified into (Kotler)
– Pure Goods like salt
– Pure Services like nursing
– Major product with a minor service like parts/maintaining – like automobile
– Major service with a minor good- airlines with minor good being the meals during the flight
– 50:50 combination of goods and services like Hotels
GOODS – SERVICES CONTINUUM

17
MARKETING OF SERVICES IS MORE
DIFFICULT THAN GOODS – WHY?

WHAT ARE THE CHARACTERISTICS OF

SERVICE THAT MAKE THEM HARD TO
MARKET
CHARACTERISTI
CS OF SERVICES
 CHARACTERISTICS OF SERVICES
1. Intangible
2. Perishable
3. Variable
4. Inseparable
5. Lack of ownership
6. Customer seeks time ,convenience value (Dominos 3am)
7. Distribution through non-physical channels
8. experience, involvement and co- creation
9. Difficult to evaluate
 Continuum of evaluation for different types of products

Most goods Most services

Difficult to
Easy to evaluate
evaluate

High in search qualities High in experience qualities High in credence qualities

How Will you evaluate each of your
services
 Characteristics of ServicesCompared to
Goods
Intangibility
Perishability
Simultaneous
Production
and
Consumption
Heterogeneity

Services Pose Distinct Marketing challenge - IHIP

IMPLICATIONS OF INTANGIBILITY

• Can not be inventorised

• Can not be easily patented and hence are easy to copy
• Harder to evaluate service and distinguish from competition
• Can not be readily displayed or communicated – relies very heavily on WOM
• Pricing is difficult
IMPLICATIONS OF HETEROGENEITY

• Service delivery and customer satisfaction depends on employee and customer actions
• Hard to maintain consistency, reliability and service quality or to lower costs through higher
productivity
• Depends on too many uncontrollable factors
• No sure knowledge that the service delivered matches what was planned and promoted
• Difficult to shield customers from service failures
IMPLICATIONS OF INSEPARABILITY
(SIMULATANEOUS
CONSUMPTION/PRODUCTION)

• Customers participate in and affect the transaction

• Customers Affect each other
• Mass production is difficult
• Decentralization may be essential
• Employees affect the outcome
IMPLICATIONS OF PERISHABILITY

• Difficult to synchronize demand and supply

• Can not be returned or resold

28
29
CATEGORIES OF
SERVICES
SERVICE – A PROCESS PERSPECTIVE
• Differences exist amongst services depending on what is being processed

• Classification of services into

– People processing
– Possession processing
– Mental stimulus processing
– Information processing
4 CATEGORIES OF SERVICES
PEOPLE PROCESSING

 Customers must:
 physically enter the service factory
 cooperate actively with the service operation

 Managers should think about process and

output from the customer’s
perspective
 to identify benefits created and non-financial costs:
Time, mental and physical effort
POSSESSION PROCESSING

 Involvement is limited
 Less physical involvement
MENTAL STIMULUS
PROCESSING

 Physical presence of recipients may not

be required
 Core content of services is information-
based
 Can be ‘inventoried’
INFORMATION PROCESSING

 Most intangible form of service

 May be transformed:

 Into enduring forms of service output

 Line between information processing and

mental stimulus processing may
be unclear
H O W T H E C L A S S I F I C AT I O N O F S E RV I C E C AT E G O R Y H E L P S M A R K E T E R S I N S E RV I C E D E S I G N ?

F O R Y O U R B U S I N E S S – W H AT A R E T H E M A R K E T I N G R E L AT E D A C T I V I T I E S T H AT Y O U R
BUSINESS MUST DO?

SUBMIT ON 16TH AUGUST

SERVICES AS A
PROCESS
SERVICE ENCOUNTER

• Service encounter stage is when the customer interacts directly with the service firm
• Customers perception of Service quality is based on his/her encounters with the firm or the
service provider where a service moment is created.
• Jan Carlzon, CEO of Scandinavian Airline system, called these moments as ‘moment of truth’
• Carlzon estimated that on an average in a year the 10 million SAS customers meet about 5
service personnel, which results in 50 million moments of truth
• The issue is how are these moments managed???
• Every service moment is an opportunity to gain market share and profit
SERVICES ENCOUNTERS RANGE
FROM HIGH TO LOW CONTACT
 SERVICE SYSTEM
‘SERVUCTION’ MODEL - SYSTEM THAT INCLUDES MARKETING
OPERATIONS AND CUSTOMERS

• Model presented by Bateson, originally

developed by Eric langeard and Pierre Eiglier
• According to the model, customers receive a
bundle of benefits from each service experience
as a result of their interaction with visible
elements of the service system

• Visible elements include

 All contact personnel employed by the service
provider
 Other customers within the service system

• Invisible part:
 Infrastructure
 Systems
SERVUCTION MODEL

• Consists of two parts

– Technical core – typically backstage and invisible to the customer
– Service delivery system – where the final assembly takes place and the product is delivered to the
customer
– Services Marketing system
 SERVICE MARKETING SYSTEM FOR A
HIGH-CONTACT SERVICE
SERVICE MARKETING SYSTEM
Service Delivery System Other Contact Points

Advertising
Service Operations System Other
Customers Sales Calls
Interior & Exterior
Market Research Surveys
Facilities
Billing/Statements
Technical The
Equipment Misc. Mail, Phone Calls,
Core Customer E-mails, Faxes, etc.
Website
Service People Random Exposure to
Facilities/Vehicles

Backstage Front Stage Other Chance Encounters with Service

Personnel
(invisible) (visible) Customers
Word of Mouth
 SERVICE MARKETING SYSTEM FOR A
LOW-CONTACT SERVICE

Service Operations SERVICE MARKETING SYSTEM

System Other Contact Points
Service Delivery System

Mail Advertising
Market Research Surveys

Technical Self Service The Billing/Statements

Core Equipment Customer Random Exposure to
Facilities/Vehicles
Phone, Fax,
Web- site, etc. Word of Mouth

Front Stage
Backstage (visible)
(invisible)
SERVICE ENCOUNTER - MOMENT OF
TRUTH

• Customers perception of Service quality is based on his/her encounters with

the firm or the service provider where a service moment is created.
• Jan Carlzon, CEO of Scandinavian Airline system, called these moments as
‘moment of truth’
• Carlzon estimated that on an average in a year the 10 million SAS customers
meet about 5 service personnel, which results in 50 million moments of truth
• The issue is how are these moments managed???
• Every service moment is an opportunity to gain market share and profit
Service Encounters Or Moments Of Truth
Service Encounters Are The Building Blocks Of Service
Quality & Satisfaction

- Every experience with product, service or person which

allows customer to judge/ form impressions about the
quality of service is a moment of truth.
- It takes 10 good moments of truth to wipe one bad moment
of truth.
- Types of service encounters- remote, phone, face to face.

–- In remote - tangible evidence & technical quality

important.
–- In phone- process quality
–- In face to face - customers also play role.
 SERVICE ENCOUNTER /MOMENT OF
TRUTH
• First moment of truth (FMOT): When a customer is confronted with the product in-store or
in real life.
• Second moment of truth (SMOT): When a customer purchases a product and experiences
its quality as per the promise of the brand.
• Third moment of truth (TMOT): Consumers feedback or reaction towards a brand, product
or service i.e. consumer becomes brand advocate and gives back via word of mouth or social
media publishing.
• Zero Moment of truth (ZMOT) is a term coined by Google in 2011,actually refers to the
research which is conducted by a user online about a product or service before taking any
action i.e. searching for mobile reviews before making a purchase.
• The less than Zero Moment of truth (<ZMOT) is a term, referring to the time between an
Event in a Customer's life happening and the point at which they decide to research a
purchase (ZMOT).
THE SERVICES TRIANGLE AND TECHNOLOGY

Company

External Marketing
Internal Marketing
Making promises
Enabling promises
Advertising
Vertical/ Sales promotion
Horizontal Communication Technology PR
Direct Mktg

Interactive Marketing
Keeping promises

Providers Personal Selling

Customers
Customer Service Centre
Service Encounter/ Servicescapes
DELIVERING QUALITY SERVICE -
COMPANY-WIDE COMMITMENT

- SERVICE STRATEGY (valuable to customer & differentiated)

- SERVICE SYSTEMS, RULES, POLICIES -

Customer-friendly

- CUSTOMER-ORIENTED SERVICE PEOPLE Customer care

Marketing Challenges
Posed by Services
 SERVICES POSE DISTINCTIVE
MARKETING CHALLENGES

• Marketing management tasks in the service sector differ from those in the
manufacturing sector.

• Eight common differences between services and goods but they do not apply
equally to all services

What are marketing implications of these differences?