Introduction

to
services marketing
Definition
z Any act or performance that one party can offer to
another that is essentially intangible and does not result
in ownership of any things .
z Services refer to social efforts which include even
govt. to fight five giant evils , e.g. want , disease,
ignorance, poverty, and illness in their society.
z Services can also be defined an actions of
organizations that maintains and improves the well
being and functioning of people.
Why services marketing
z Services dominate economy in most nations
z Understanding services offers you personal
competitive advantages
z Importance of service sector in economy is growing
rapidly:
– Services account for more than 60 percent of GDP
worldwide
– Almost all economies have a substantial service sector
– Most new employment is provided by services
– Strongest growth area for marketing
 Estimated Size of Service Sector in
Selected Countries

Cayman Islands (95%), Jersey (93%)

Bahamas (90%), Bermuda ( 89%)
Luxembourg (83%)
Panama (80%), USA (79%)
Japan (74%), France (73%), U.K. (73%), Canada (71%)

Mexico (69%), Australia (68%), Germany (68%)

Poland (66%), South Africa (65%)
Israel (60%), Russia (58%), S. Korea (56%)
Argentina (53%), Brazil (51%)
India (48%)
China (40%)

Saudi Arabia (33%) Services as Percent of GDP

10 20 30 40 50 60 70 80 90
 Why Study Services?
z Most new jobs are generated by services
– Fastest growth expected in knowledge-based
industries
– Significant training and educational qualifications
required, but employees will be more highly
compensated
– Will service jobs lost to lower-cost countries? Yes,
some service jobs can be exported
 Why Study Services?
z Powerful forces are transforming service
markets
– Government policies, social changes, business
trends, advances in IT, internationalization
z These forces are reshaping
– Demand
– Supply
– The competitive landscape
– Customers’ choices, power, and decision making
 Characteristics i.e. .nature of services
z Intangibility: A buyer of products have an
opportunity to see, touch , hear, smell or taste them
before they buy we don’t find the same for the
services products .
Example :the banking organizations promote the sale of
credit cards by visualizing the conveniences and
comforts the holders of the credit cards are likely to
get from the same
 Value Added by Physical, Intangible
Elements Helps Distinguish Goods
Physical
Elements and Services
High
Salt
Detergents
CD Player
Wine
Golf Clubs
New Car
Tailored clothing Plumbing Repair
Fast-Food Restaurant Health Club
Airline Flight
Landscape Maintenance
Consulting
Life Insurance
Internet Banking

Low Intangible Elements High

Source; Adapted from Lynn Shostack
z Perishability : the goods if not sold today can be stored,
preserved for further selling. Thus the risk is less . In
services if we fail to sell the services , it is lost only not
for today but even for the future.
Example : a seat in the air craft remains unsold, if a
bedroom in a hotel remains un-booked, if a chair in a
cinema hall remains vacant …
This makes it essential that decision makers by using their
professionalism minimise the possibilities of economic
waste.
z Inseparability: services are created and supplied
simultaneously.
Example : dancers, dentists …

Goods are produced, sold and then consumed whereas the

services are sold and then produced and consumed.
z Heterogeneity : the quality of services can’t be
standardized. The prices charged may be too
high or too low.
Example : entertainment , sports ..
z Ownership : the user of services have just an
access to the services. A service is any activity
or benefit that one party can offer to another
that it is essentially intangible and does not
result in the ownership of anything.

Example :a consumer can use hotel room or

swimming pool , however the ownership rests
with the providers
z Simultaneity :services don’t move through the
channel of distribution. For availing the services ,
it is essential that the users are brought to the
providers or the providers go to the users.

Example : hotel rooms can’t be brought to the users

, aeroplane can’t be brought to the customers …
 Goods vs. services
Nature Goods Services
Tangibility Y N
(viewed)
Transferability Y N
Existence Y N
(durable)
Heterogeneity Y N
(standardized )
Re-selling Y N
 Reasons for growth in service
sector
z Demography : increase in population , high birth rate
given a scope for childcare centers, education….
z Political and legal : the increase in govt. interaction in
the trade sector has increased trade relationships between
nations leading to development of tourism and hotel
industry.
z Social : the increase in single person household , smaller
families and working women mean more discretionary
income , more time for travel and entertainment and also
need for child care services..
 Reasons for growth in service
sector
z Technological :development of IT , influence of internet
has resulted in increasing mobility of educated labour
force among countries leads to many services like travel,
banking, education …
z Economic : the growth of large firms has brought about
greater dependence on special service providers like
market research and advertising agencies.
 Role of service in an economy
The economy model shows the flow of activity among the 3
principal sector
1.Extractive (mining and farming)
2.Manufacturing
3.Service
All these divided into five sub groups
z Business services: ( consulting , finance, banking)
z Trade services: (retailing , maintenance)
z Infrastructure services : (transportation and
communications)
z Social services : ( restaurants , health care.)
z Public administration : (education, govt. )
 Marketing Challenges and Strategic Options in Service Marketing
Service Marketing
Characteristics problems/Challenges
•Cannot be Communicated
•Consumer suspects due to
absence of concrete
evidences
•Design of total service
Intangibility
package not possible
•Comparative presentation is
not possible
Strategic Options
•Tangibilising the service
process to the maximum
possible extent
•Managing and promoting
word of mouth
communication
•Strengthening internal and
external marketing.
•Use of relationship
marketing
 Marketing Challenges and Strategic Options in Service Marketing

Service Marketing
Characteristics problems/Challenges Strategic Options

•Problems of market expansion •Minimization of customer

•Maintenance of service quality interactions
•Compulsory presence of •Innovating techniques of indirect
consumer interaction
•Limited production capacity •Standardisation to the maximum

Inseparability •Operation at limited capacity

possible extent
•Developing distribution network
with quality control mechanism
 Marketing Challenges and Strategic Options in Service Marketing
Service Marketing problems/Challenges
Characteristics
•Limited scope for
Standardisation
•Not possible to communicate
exactly what the consumer is
going to receive
Variability
•Quality can be determined
only after the service is
consumed
Strategic Options
•More focus on
Standardization
•Internal marketing and
employee training
•Positioning variation as a
strength of innovation
•Promote research and
innovations
 Marketing Challenges and Strategic Options in Service Marketing

Service Marketing
Strategic Options
Characteristics problems/Challenges

•Customers are not •Effective external marketing

controllable
•Production quality also
depends upon customers
knowledge and ability to
Customer participate
participation
•Customers are evaluative at
every stage of service
production
•Customer education and
training
•Effective interactive
marketing
•Management of movements
of truth
•Effective internal marketing
 Marketing Challenges and Strategic Options in Service Marketing

Service Marketing
Strategic Options
Characteristics problems/Challenges

•Nothing remains after •Tangibilisation of

consumption communication
•Very less time to the • Customer relationship
consumer to evaluate marketing
No Ownership the product •Managing high level of
•High consumer company image
dissonance
Classification of services
z End –user
1. Consumer: leisure, hairdressing, personal
finance..
2. Business to business: advertising agencies,
printing, consultancy.
3. Industrial : plant maintenance and repair,
installation and hygiene.
 Classification of services
z Service tangibility :
1. Highly tangible : car rental , vending machines ,
telecommunications.
2. Service linked to tangible goods : domestic
appliance repair, car service.
3. Highly tangible : psychotherapy , consultancy ,
legal services .
 Classification of services
z People- based services :
1. High contact : education dental care , medical
services, restaurants.
2. Equipment based (low contact) : car wash ,
vending machine, cinema.
 Classification of services
z Expertise & skills :
1. Professional : medical services , legal
services, teaching
2. Non – professional :baby sitting, caretaking ,
caretaking, casual labour.
 Classification of services
z Profit orientation :
1. Not for profit : the scouts association,
charities, public sector leisure facilities.
2. Commercial : banks, airlines, tour operators,
hotel and catering services .
 INDUSTRIES CLASSIFIED UNDER SERVICES SECTOR
1. Transportation and Public utilities
2. Communication
3. Electric, gas and sanitary services
4. Wholesale and retail trade
5. Finance, Insurance and Real Estates
6. Hotels and Lodging
7. Personal services
8. Business services
9. Repair and Maintenance contract services
10. Motion pictures
11. Amusement and recreation services
12. Health services
13. Legal services
14. Educational services
15. Social Organizations offering services
16. Other professional services and private household services
17. Government services – civilian cum military
18. Government enterprises
19. State and Local government services
20. Tourism services
Thank you