Services Marketing

-Dr.O.M.Ashtankar KITS, Ramtek

Goods - things you can touch - tangible

Services - things you cant touch - but you can see their effect intangible
services are not physical, they are intangible

A Service is a type of a product.

a deed performed by one party for another

Discussions about the marketing of goods apply to services as well. Services have special characteristics that make them different than products.

A product without physical characteristics; a bundle of performance and symbolic attributes designed to produce consumer want satisfaction.

4 Characteristics of Services

1. Intangibility - u cant touch this

2. Production (or performing the service) and Consumption (using the service) - happens at the same time 3. Heterogeneity - services are not always delivered the same way
4. Perishability - cannot be put in inventory or stored for later use ie. You cant buy 2 haircuts

1. Intangibility - u cant touch this

Services cannot be stored Services cannot be protected through patents - therefore a really great travel package and service can be copied a really great physical object can be patented, and NOT allowed to be copied

1. Intangibility - u cant touch this

Hard to explain and display Services if you cant see them

Prices are difficult to set - depends on customers expectations

2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time

Many people involved in delivering a service

mass production of services is hard to do

3. Heterogeneity - services are not always

delivered the same way It is very difficult to standardize services

eg. A machine can make ice cream cones a standard size 100% of the time
A person filling an ice cream cone with a scoop cannot do it the same amount each time, unless you use a machine to dispense the ice cream

3. Heterogeneity - services are not always

delivered the same way It is very difficult to standardize services

eg. A Taxi driver cannot drive you to the office in exactly the same time each day because the traffic patterns change eg. A travel agent can sell you a vacation package - but cannot guarantee you will like the trip exactly the same way another tourist did.

4. Perishability - cannot be put in inventory

or stored for later use

ie. You cant buy 2 haircuts

Demand fluctuates and changes, sometimes depending on the season, or weather eg. Taxi in the rain, vacation in summer

Tangible / Intangible Attributes

Tangible

Intangible

touch see taste smell

cant see cant touch cant smell cant taste

Goods and Services: Scale of Elemental Dominance

Not in the text

The service sector

The services sector has been growing at a rate of 8% per annum in recent years More than half of our GDP is accounted for from the services sector This sector dominates with the best jobs, best talent and best incomes

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-

What is services?

It is the part of the product or the full product for which the customer is willing to see value and pay for it.

What is a service?

It is intangible. It does not result in ownership. It may or may not be attached with a physical product

Difference between physical goods and services

Physical goods Services

tangible
homogeneous Production and distribution are separated from consumption

intangible
heterogeneous Production, distribution and consumption are simultaneous processes

A thing
Core value processed in factory Customers do not participate in the production process

An activity or process
Core value produced in the buyer-seller interaction Customers participate in production

Can be kept in stock Transfer of ownership

Cannot be kept in stock No transfer of ownership

Most products have a service component

They could be Equipment based People based varying skill levels

Services could meet

Personal needs haircuts, tution, massage parlours Business needs courier services, office cleaning services, delivering fresh flowers

Characteristics of services

Intangibility Inseparability Perishability Variability

The three additional Ps of Service Marketing

People Physical evidence Process

Qualities of services

Search qualities Experience qualities Credence qualities

Differentiation in services

Offering Faster and better delivery Image

Managing Service quality

Gap between management perceptions and consumer expectations Gap between management perceptions and service quality specifications Gap between service quality specifications and service delivery Gap between service delivery and external communication Gap between expected service and perceived service

Determinants of service quality

Reliability delivering on promises Responsiveness willing to help Assurance inspiring trust and confidence Empathy individualising customers Tangibles- physical representation

Moments of truth

It is the customer service encounter Every positive or negative experience of the consumer would have fall-out on the overall service experience

In services, the last experience remains uppermost in your mind. Therefore, it is not enough to be good, you have to be consistently good

Services Monitoring

Continuous auditing of competitor service levels versus own company Importance - performance analysis

Importance Performance Analysis

I M P O R T A C E

Concentrate here

Keep up the good work

Low priority

Possible overkill

PERFORMANCE

Service quality is directly proportional to employee satisfaction

When customers visit a service establishment

Their satisfaction will be influenced by Encounters with service personnel Appearance and features of service facilities exterior and interior Interactions with self service equipment Characteristics and behaviour of other customers

Customer Service Expectations

Desired Service the wished for service Adequate Service the service that would be acceptable

Zone of Tolerance

Difference between the desired service and the adequate service

Service Encounter Themes

Recovery Adaptability Spontaneity Coping

Recovery

Dont Ignore customer Blame customer Leave customer to fend for himself Downgrade Act as if nothing is wrong pass the buck

Do Acknowledge problem Explain causes Apologise Compensate/upgrade Lay out options Take responsibility

Adaptability

Dont Promise and fail to keep them Show unwillingness to try Embarrass the customer Laugh at the customer Avoid responsibility

Do Recognise the seriousness Acknowledge Anticipate Accommodate Adjust Explain rules/policies

Spontaneity

Dont Exhibit impatience Yell/laugh/swear Steal from customers Discriminate Ignore

Do Take time Be attentive Anticipate needs Listen Provide information Show empathy

Coping

Dont Take customers dissatisfaction personally Let customers dissatisfaction affect others

Do

Listen Try to accommodate Explain Let go of the customer

Types of complainers

Passives Voicers Irates Activists

Customer complaints

It pays to resolve customer complaints On an average only 5 % dissatisfied customers complain. Others simply go over to the competitor A satisfied consumer speaks to an average of 3 people on his her experience A dissatisfied consumer gripes to on an average 11 persons about his/her unpleasant experience

Companies that pay importance to resolving customer complaints

Pay attention to quality and training of manpower recruited Have clear benchmarks on service quality and communicate to employees Take remedial steps to improve customer satisfaction and prevent repeats of customer dissatisfaction Have a data base on customer complaints that is periodically analysed and policies adjusted

Satisfied employees will produce satisfied customers

Morale Motivation Mood

Managing Service Productivity

Giving quality service is an expensive business Not every consumer is willing to pay extra for service quality Service providers would have to find their optimum service quality/cost ratios Can technology substitute part of the labour content? Can customers substitute part of the labour content? Making services obsolete by product innovations

UNIQUE SERVICE CHARACTERISTICS & RESULTING MARKEITNG PROBLEMS

1)

Intangibility
Difficult for consumer to evaluate Marketer is forced to sell a promise Difficult to advertise & display Prices are difficult to set & Justify

2)
3)

4)

Inseparability of Production & Consumption:

1)

2)

3) 4)

5)

Service provider are critical to delivery Consumers must participate in production Other consumers affect service outcomes Consumer does not take physical possession Services are difficult to distribute

Perishability
1) 2)

3)
4)

Services cannot be inventoried Very difficult to balance demand & supply Unused capacity is lost forever Demand is very time sensitive

Heteroginity

Service quality is difficult to control Difficult to standardize service delivery

Client based relationship

1)

2)

3)

Success depends on satisfying & keeping customers in the long run Generating repeat business is challenging Relationship marketing becomes critical

Customer Contact
1)
2)

3)

Service provider are critical to delivery High levels of service employee training & motivation are required Changing a High contact service into a low contact service to achieve lower costs without reducing customer satisfaction

Service quality dimensions Vs. Evaluation criteria

Service Quality

Moments of Truth

Each customer contact is called a moment of truth. You have the ability to either satisfy or dissatisfy them when you contact them. A service recovery is satisfying a previously dissatisfied customer and making them a loyal customer.

Dimensions of Service Quality

Reliability: Perform promised service dependably and accurately. Example: receive mail at same time each day. Responsiveness: Willingness to help customers promptly. Example: avoid keeping customers waiting for no apparent reason.

Dimensions of Service Quality

Assurance: Ability to convey trust and confidence. Example: being polite and showing respect for customer. Empathy: Ability to be approachable. Example: being a good listener. Tangibles: Physical facilities and facilitating goods. Example: cleanliness.

DIMENSION

PROBLEM

POSSIBLE RESPONSE

Intangibility Customer cannot see or

otherwise physically sense the product

Associate service with tangible product; use marketers reputation other clues to communicate the services worth

Perishability Product cannot be stored;

opportunity to sell or buy services is quickly lost

Use demand forecasti & management of demand

DIMENSION

PROBLEM

POSSIBLE RESPONSE

Inseparabilit Buyer & seller must both be present for exchange to y

occur; service producer is also a marketer

Because direct distribution is nearly inevitable, locate near purchasers; train serv providers to deal with customers

Variability

Quality of delivered service Standardize the servic & its delivery to can vary widely

minimize the variance Customise the service best fit individual buy

Perceived Service Quality

Word of mouth Personal needs Past experience

Service Quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles

Expected service

Perceived service

Service Quality Assessment 1. Expectations exceeded ES<PS (Quality surprise) 2. Expectations met ES~PS (Satisfactory quality) 3. Expectations not met ES>PS (Unacceptable quality)

DIMENSION

EVALUATION CRITERIA Appearance of physical facilities Appearance of Service personnel Tools or equipment used to provide the service

EXAMPLES

Tangibles
Physical evidence of the service

A clean & professiona looking doctors offic Quality of food in restaurant Equipment used in medical exam. \

Accuracy of billing or Consistency & record keeping dependability in Performing services when performing the promised

Reliability

service

An accurate Bank statement A confirmed hotel reservation An Airline flight departing & arriving o time

DIMENSION

EVALUATION CRITERIA

EXAMPLES

Responsive ness
Willingness of employee

Returning customer phone calls Ambulance arriv min. Providing prompt service A waiter refilling Handling urgent requests

customers glass o without being ask

Knowledge & Skills of employees Konwledge/com Company name & reputation petence of Personnel characteristics of employees & employee

Assurance

ability to convey trust & confidence

A highly trained financial advisor A known & respe service provider A doctors bedsid manners

DIMENSION

EVALUATION CRITERIA Listening to customer needs Caring about the customers interests Providing personalized attention

EXAMPLES

Empathy
Caring & individual attention provided by employees

A store employee listening to and trying understand a custome complaint A nurse counseling a heart patient