MB-4M6 (SERVICE MARKETING) BY.MD.S.

MUKHTAR
UNIT-I

INTRODUCTION OF SERVICE MARKETING:-

 Services Marketing refers to the marketing of services as against tangible
products.
 Service marketing is that marketing whose main focus is to market services
like- Treatment, Packages, promotion service etc.
 Marketing that include all the services marketing excluding Physical
Product.

 Marketing services such as hair-cutting, accounting, and legal assistance.

 Marketing services like Inbound, Outbound, BPO and digital marketing

services to promote your business or website.

 The American Marketing Association, defines services as activities, benefits,

or satisfactions that are offered for sale or provided with sale of goods to the
customer, that is, pre-sale and after-sales services. Berry states, ‘while a
product is an object, devise or physical thing, a service is a deed,
performance, or an effort’.

 Service marketing is marketing based on relationship and value. It may be

used to market a service or a product. With the increasing prominence of
services in the global economy, service marketing has become a subject that
needs to be studied separately. Marketing services is different from
marketing goods because of the unique characteristics of services namely,
intangibility, heterogeneity, perishability and inseparability.

 In most countries, services add more economic value than agriculture, raw
materials and manufacturing combined. In developed economies,
employment is dominated by service jobs and most new job growth comes
from services.

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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR

 Services marketing is a broad category of marketing strategies focused on

selling anything that is not a physical product. This includes everything from
personal services like medical care and spa treatments, to the rental of
vehicles and spaces, to experiences like concerts and dance lessons. Any
method that can communicate a service's appeal and benefits to customers
is a valid approach, including informational content, promotional deals,
advertisements, and many other kinds of marketing materials.

Types of Services
1. Core Services: A service that is the primary purpose of the transaction.

Eg: a haircut or the services of lawyer or teacher.

2. Supplementary Services: Services that are rendered as a corollary to

the sale of a tangible product.

Eg: Home delivery options offered by restaurants above a minimum bill

value.

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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR

CHARACTERISTICS / FEATURES OF SERVICES

1. Intangibility:
A physical product is visible and concrete. Services are intangible. The
service cannot be touched or viewed, so it is difficult for clients to tell
in advance what they will be getting. For example, banks promote the
sale of credit cards by emphasizing the conveniences and advantages
derived from possessing a credit card.

2. Inseparability:
Personal services cannot be separated from the individual. Services are
created and consumed simultaneously. The service is being produced
at the same time that the client is receiving it; for example, during an
online search or a legal consultation. Dentist, musicians, dancers, etc.
create and offer services at the same time.

3. Heterogeneity (or variability):

Services involve people, and people are all different. There is a strong
possibility that the same enquiry would be answered slightly differently
by different people (or even by the same person at different times). It
is important to minimize the differences in performance (through
training, standard setting and quality assurance). The quality of
services offered by firms can never be standardized.

4. Perishability:
Services have a high degree of perishability. Unused capacity cannot be
stored for future use. If services are not used today, it is lost forever. For
example, spare seats in an aeroplane cannot be transferred to the next flight.
Similarly, empty rooms in five-star hotels and credits not utilized are
examples of services leading to economic losses. As services are activities
performed for simultaneous consumption, they perish unless consumed.

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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR
5. Changing demand:
The demand for services has wide fluctuations and may be seasonal.
Demand for tourism is seasonal, other services such as demand for
public transport, cricket field and golf courses have fluctuations in
demand.

6. Pricing of services:
Quality of services cannot be standardized. The pricing of services are
usually determined on the basis of demand and competition. For
example, room rents in tourist spots fluctuate as per demand and
season and many of the service providers give off-season discounts

7. Direct channel:
Usually, services are directly provided to the customer. The customer
goes directly to the service provider to get services such as bank, hotel,
doctor, and so on. A wider market is reached through franchising such
as McDonald’s and Monginis.

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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR

Problems in Marketing Services

1) A service cannot be demonstrated.

2) Sale, production and consumption of services takes place

simultaneously.

3) A service cannot be stored. It cannot be produced in anticipation of

demand.

4) Services cannot be protected through patents.

5) Services cannot be separated from the service provider.

6) Services are not standardized and are inconsistent.

7) Service providers appointing franchisees may face problems of quality

of services.

8) The customer perception of service quality is more directly linked to

the morale, motivation and skill of the frontline staff of any service
organization.

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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR

Maintaining Service Quality

After having attained the desired service level, the next great challenge faced
by service providers is to maintain service standards at levels of excellence.
This is as important, and as tough, as establishing service standards and
attaining to them in the first place.
There are basically two approaches that any organization can have towards
maintaining service standards - a proactive approach or a reactive approach.

Proactive: A proactive approach entails actively reaching out to customers

and trying to gather their feedback on service quality and suggested areas of
improvement. This can be done by way of

a) Surveys and administering questionnaires

b) Gap Analysis, and
c) Staff training

a. Surveys and questionnaires: Such an approach helps a brand to

anticipate customer demands and expectations and align its service
offering accordingly. Also, the findings of such surveys can help to
identify common issues and demands of customers hence helping a
company to customize its service offering.

b. Gap Analysis: Another approach that is adopted for analyzing service

quality is that of the gap analysis. The company has an ideal service
standard that it would like to offer to its customers. This is contrasted with
the current level of service being offered. The gap thus identified serves
both as a measure and as a basis for planning a future course of action
to improve the service offering.

c. Staff Training: Another crucial aspect of the proactive approach is staff

training. Companies nowadays spend generously on training their
personnel to adequately handle customer queries and/or complaints.
This is particularly true if a company is changing its service offering or
going in for a price hike of its existing services. For example, when a fast
food chain increases the price of its existing products, the staff has to
handle multiple customer queries regarding the hike. Lack of a
satisfactory explanation would signify poor service standards and lead to
customer dissatisfaction.

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Reactive: A reactive approach basically consists of resorting to a

predetermined service recovery mechanism once a customer complains about
poor service quality. It usually starts with apologizing to the customer and then
taking steps to redeem the situation. The fundamental flaw with this approach
is that, here the customer has already had a bad experience of the brand’s
service.

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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR

Difference between Goods and Services

Given below are the fundamental differences between physical goods and
services:

BASIS FOR
GOODS SERVICES
COMPARISON

Meaning Goods are the material items Services are amenities,

that can be seen, touched or facilities, benefits or help
felt and are ready for sale to provided by other people.
the customers.

Nature Tangible Intangible

Transfer of Yes No
ownership

Evaluation Very simple and easy Complicated

Return Goods can be returned. Services cannot be

returned back once they
are provided.

Separable Yes, goods can be separated No, services cannot be

from the seller. separated from the service
provider.

Variability Identical Diversified

Storage Goods can be stored for use in Services cannot be stored.

future or multiple use.

Production and There is a time lag between Production and

Consumption production and consumption Consumption of goods
of goods. occurs simultaneously.

A physical commodity A process or activity

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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR
BASIS FOR
GOODS SERVICES
COMPARISON

Tangible Intangible

Homogenous Heterogeneous

Production and distribution Production, distribution

are separation from their and consumption are
consumption simultaneous processes

Can be stored Cannot be stored

Transfer of ownership is Transfer of ownership is

possible not possible

Key Differences Between Goods and Services

The basic differences between goods and services are mentioned below:

1. Goods are the material items that the customers are ready to purchase for a price.
Services are the amenities, benefits or facilities provided by the other persons.
2. Goods are tangible items i.e. they can be seen or touched whereas services are
intangible items.
3. When the buyer purchases the goods by paying the consideration, the ownership of
goods moves from the seller to the buyer. Conversely, the ownership of services is
non-transferable.
4. The evaluation of services is difficult because every service provider has a different
approach of carrying out services, so it is hard to judge whose services are better than
the other as compared to goods.
5. Goods can be returned to or exchanged with the seller, but it is not possible to return
or exchange services, once they are provided.
6. Goods can be distinguished from the seller. On the other hand, services and service
provider are inseparable.
7. A particular product will remain same regarding physical characteristics and
specifications, but services can never remain same.
8. Goods can be stored for future use, but services are time bound, i.e. if not availed in
the given time, then it cannot be stored.
9. First of all the goods are produced, then they are traded and finally consumed,
whereas services are produced and consumed at the same time.

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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR

7 P’s of Services Marketing

The first four elements in the services marketing mix are the same as those in
the traditional marketing mix. However, given the unique nature of services,
the implications of these are slightly different in case of services.

1. Product: In case of services, the ‘product’ is intangible, heterogeneous and

perishable. Moreover, its production and consumption are inseparable.
Hence, there is scope for customizing the offering as per customer
requirements and the actual customer encounter therefore assumes
particular significance. However, too much customization would
compromise the standard delivery of the service and adversely affect its
quality. Hence particular care has to be taken in designing the service
offering.

2. Pricing: Pricing of services is tougher than pricing of goods. While the latter
can be priced easily by taking into account the raw material costs, in case
of services attendant costs - such as labor and overhead costs - also need
to be factored in. Thus a restaurant not only has to charge for the cost of the
food served but also has to calculate a price for the ambience provided. The
final price for the service is then arrived at by including a mark up for an
adequate profit margin.

3. Place: Since service delivery is concurrent with its production and cannot
be stored or transported, the location of the service product assumes
importance. Service providers have to give special thought to where the
service would be provided. Thus, a fine dine restaurant is better located in
a busy, upscale market as against on the outskirts of a city. Similarly, a
holiday resort is better situated in the countryside away from the rush and
noise of a city.

4. Promotion: Since a service offering can be easily replicated promotion

becomes crucial in differentiating a service offering in the mind of the
consumer. Thus, service providers offering identical services such as
airlines or banks and insurance companies invest heavily in advertising their
services. This is crucial in attracting customers in a segment where the
services providers have nearly identical offerings.
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MB-4M6 (SERVICE MARKETING) BY.MD.S.MUKHTAR

We now look at the 3 new elements of the services marketing mix -

people, process and physical evidence - which are unique to the
marketing of services.

5. People: People are a defining factor in a service delivery process, since a

service is inseparable from the person providing it. Thus, a restaurant is
known as much for its food as for the service provided by its staff. The same
is true of banks and department stores. Consequently, customer service
training for staff has become a top priority for many organizations today.

6. Process: The process of service delivery is crucial since it ensures that the
same standard of service is repeatedly delivered to the customers.
Therefore, most companies have a service blue print which provides the
details of the service delivery process, often going down to even defining
the service script and the greeting phrases to be used by the service staff.

7. Physical Evidence: Since services are intangible in nature most service

providers strive to incorporate certain tangible elements into their offering to
enhance customer experience. Thus, there are hair salons that have well
designed waiting areas often with magazines and plush sofas for patrons to
read and relax while they await their turn. Similarly, restaurants invest
heavily in their interior design and decorations to offer a tangible and unique
experience to their guests.

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