Service Marketing

What are services?

Deeds: Tangible output (other than goods)
repairs, maintenance services, consulting services, training,
e-commerce applications, web design, surgery,

Processes: Normally intangible output

analysis activities, follow up calls, reporting, record entries

Performances: Intangible output

(a) Interactions with customers, reception desk, interviews
consultations, medical examination, diagnosis, teaching
(b) Intangible accompanied with physical output- restaurants,
interior decorations
Service Continuum
Characteristics of Services

Intangibility

Inseparability

Variability

Perishability
Service Intangibility

Education, counseling, medical, legal service

Before purchase decision:

Cannot be felt

Cannot be tasted

Cannot be touched

Cannot be smelled

Cannot be seen
Service Intangibility

Buyers look for signals or tangible evidences like the

place, people, price, equipment and information about the
service in order to reduce uncertainty caused by intangibility
before they pay the price.

E.g. the cleanliness of the restaurant, employee uniforms of

the hotel, etc.
Service Inseparability or Simultaneity

 Services produced and consumed simultaneously.

 Customer is present throughout/part of the

production process

 The service provider is often part of the service

 E.g. the food in the restaurant may be outstanding, but if the service
person is rude, customers will down-rate the overall service of the
restaurant.
Types of Customer Inseparability

Customer can be present while service is being

produced (bank transactions, car repairs)

Customer has to be present when service is

delivered ( hospitalization, beauty saloon, theater,
counseling, travel)

Customer interaction is essential

(consultations, tailoring )
Implications of Inseparability/Simultaneity

Customer presence affects the transaction ( good as

well as adverse)

the other customers affect the service outcome as well.
E.g. a couple may choose a restaurant for candle-light
diner but if a group of loud customers is seated next to
them, the couple will be disappointed.

Service providers find themselves playing the role of

product itself ( performance, amusement)

Location of the facility near to the customer is

important for customer interaction.
Service design additionally has to ensure:

Safety of customers to use the service (doors of trains, buses)

Signposting

Layouts : least inconvenience

Care about unpredictability of customers

Seating arrangements
Service Perishability

Seats on a flight, cinema shows etc. last for a

specified time

 Services cannot be saved

 Services cannot be stored

 Services cannot be resold

 Services cannot be returned

 Implications of Perishability

Inability to create, carry and store inventory

How do you determine optimal level of production

Full utilization of capacity is always a challenge for managers

Difficult to synchronize supply and demand

Cannot take advantage of sudden high demands

Recovery strategies are more difficult when things go wrong

Service Variability

means that the quality of services depends on who
provides them, plus, when, where, and how they are
provided.

Service providers service quality depends on his energy
and his frame of mind at the time of each customer
encounter.

E.g. within a given hotel chain, one reception desk
agent may be cheerful and efficient one day but would
be unpleasant and slow the other day.

Fluctuating demand makes it difficult to deliver
consistent services during periods of peak demand.
Goods and Services: A comparison
Activity Goods Services

Forecasting Aggregation Variable

Location Near to raw materials Close to consumers

Layout Efficiency Customer interaction

Quality Conformance Customer perceptions

Inventory Safety stocks Queuing

control
Publicity Product Service experience
Three types of interdependent marketing
in service industries

Internal marketing External marketing

Interactive marketing
External marketing

 Traditional marketing incorporating the 7Ps

Price

Product/service

Place

Promotion

People

Processes

Physical environment
 of the services marketing mix.
Interactive marketing

 Marketing that recognises that the perceived service

quality depends heavily on the buyer-seller interaction.

 Emphasis on relationship marketing.


In service businesses, the customer and front-line
service employees interact. Service providers must
interact effectively with customers to satisfy them.
That is why, companies take care of their employees
to make profit. Because they believe that only
satisfied and productive service employees can
create satisfied and loyal customers.
Internal marketing

 Marketing conducted by a service firm to train and

effectively motivate its customer contact employees and
all the supporting service people to work as a team to
provide customer satisfaction.

Consistency across service providers

Consistency of the service provider across time

Managing Service Quality

A service firm can also differentiate itself by

delivering consistently higher quality than its
competitors do.

Service quality will always vary, depending on the

interactions between employees and customers.
Managing service quality

The key to success is to exceed customer service
quality expectations.

Customer satisfaction is achieved if the delivered

service quality exceeds the customers expectation.

However, expectation is a variable component

and depends upon the perception and expectations
of the individual customer.
Service Recovery

 A company cannot always prevent service problems but can

recover them.
 A good service recovery can turn angry customers into loyal
ones.
 Companies empower front-line service employees (giving
authority to do whatever it takes to keep customers happy)
to recover problems.
 Good service companies also communicate their qualities to
employees and provide performance feedback.