SERVICES MARKETING

UNIT I
INTRODUCTION
Services marketing is a sub field
of Marketing which covers the marketing of both
goods and services.
Services marketing typically refers to the
marketing of both Business to Consumer (B2C)
and Business to Business (B2B) services.
Examples of Service Industries

Health Care
Hospital, medical practice, dentistry, eye care
Professional Services
Accounting, legal, architectural
Financial Services
Banking, investment advising, insurance
Hospitality
Restaurant, hotel/motel, bed & breakfast,
Ski resort, rafting
Travel
Airlines, travel agencies, theme park
Others:
Hair styling, pest control, plumbing, lawn
maintenance, counseling services, health club




Expanded Marketing Mix for Services
PRODUCT PLACE PROMOTION PRICE
Physical good
features

Channel type Promotion
blend
Flexibility
Quality level Exposure Salespeople Price level
Accessories Intermediaries Advertising Terms
Packaging Outlet location Sales promotion Differentiation
Warranties Transportation Publicity Allowances
Product lines Storage
Branding


PEOPLE PHYSICAL
EVIDENCE
PROCESS
Employees

Facility design Flow of activities
Customers Equipment Number of steps
Communicating
culture and values
Signage Level of customer
involvement
Employee research Employee dress
Other tangibles



Expanded Marketing Mix for Services
5 widely used fundamentals of Services
Marketing.
Intangibility:
Intangibility describes the lack of physical
evidence
Pure Services
Heterogeneity:
Also known as variability, this fundamental
explains how each service encounter is different.
This can be due to situational factors (e.g.
Weather) or personal factors (e.g. Personality
Traits).
Simultaneous Production and Consumption:
Refers to the inseparability in the service
environment between the production and
consumption of the service.

Cont
Perishability:
The immediate and time-bound nature of services
means that they cannot be reused, returned or
resold, unlike product-based companies.
Lack of Ownership:
Services are experiential in nature, especially pure
services.
Defining Services

Any act of performance that one party can offer
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 - Lovelock

Service Economy

Increased importance of the service sector in
industrialized economies.
Every product has a service value attached to
it
When a company proceeds from maximizing its
sales towards customer satisfaction it puts
emphasis on the aspect of service. It helps the
company to enhance its goodwill in the market
Advantages of the Service Economy

Rise to a decentralized means of producing
skilled jobs.
The individual enterprises will receive the
competitive advantage in entering open markets
while the big shots remain engrossed in selling
products.
Product-life extension is a scheme that will
reduce the material and energy consumption
required to satisfy the needs of the consumers. It
will enhance the productivity per unit.

THE EVOLUTION OF SERVICES
MARKETING
Pre 1980 1980-1986 1986-2000
STAGE I - Crawling Out' Stage:

Took place prior to 1980
The need for a separate body of literature to deal with the
specific problems of the service sector.
Specific areas of marketing theory were examined and
found to be insufficient or inappropriate
Marketing traditionalists argued that service organizations did not
need a separate body of theory, and that existing marketing
theories could, and should, be applied to service organizations
That services could not be defined tightly enough to deserve
special treatment and, in many instances
The after sales service guarantee supplied with a motor car
could be valued as highly as the interior design features of
the car itself.

STAGE II - Scurrying About' Stage:
The 'scurrying about' stage between 1980 and
1985 efforts were made to classify services more
clearly and attention focused heavily on the
crucial issue of managing quality in service
operations
Zeithaml, Berry and Parasuraman developed
their pioneering 'gaps model' of service quality
In the 'crawling out' stage: Intangibility,
Inseparability, Heterogeneity and
Perishability.
Booms and Bitner added three more Ps
People, Process and Physical Evidence
STAGE III - Walking Erect' Stage:
'Walking Erect' stage since 1986
Service Encounters, Service Design, Perceived
Service Quality and Customer Satisfaction,
Internal Marketing and Relationship Marketing
STAGE IV - The 'Galloping' stage

In the Galloping stage since 2000
Increase in the growth of the service sector
Services are the main contributors to the GDP
of the country

THE GROWTH OF THE SERVICE
SECTOR

Demographic Changes
Social Changes:
Economic Changes:
Technological Changes:
Political and Legal Changes:
Policy Changes :

Demographic Changes
Taking place in a country have a significant
influence on the growth of the service sector in
the country
There are three phases of demographic
growth
In the first phase:
The rate of mortality and fertility decrease. As
a result, the number of births per year decrease
and people live longer.

Cont
In the second phase:
The proportion of young people in the population
increases.
If the country is able to provide employment.
Opportunities for these young people, they will
have enough disposable income to spend after
having purchased essential commodities.
This provides an opportunity for service industries
to market their services to the young.

Cont
In the third phase:
The number of aged people in the country
increases.
Increased awareness prompts people to save
money for the time when they are no longer able
to earn.
Therefore, in this stage of demographic
development, old people who have enough
money and leisure to spend their savings, form an
important segment for the service industry.

Social Changes
Standard of living of people around the world
has improved significantly
More and more women are entering the
workforce thus increasing the number of double-
income households among the middle class.
Child -care service provision has risen because of
the increase in the number of working mothers.
11.9% in the growth of services like hotel,
transport and communication in the second
quarter of the financial year 2003-04. Health care,
education and entertainment industries are also
growing fast
There are many more takers for convenient
shopping in malls

Economic Changes
many socialist countries like Russia
transformed themselves from socialist
economies to capitalist economies
Globalization is one of the major factors that
has contributed to the growth of service
sector.
Since several developing countries have removed
cross-border trade barriers
More and more MNCs have started opening their
shop in India.

Technological Changes
Advances in information technology have also
facilitated the growth of the service sector
past, the responsibility of a company ended once
it shipped the product to the customer
But now, firms have realized that they can
differentiate themselves from their competitors by
offering after-sales support services.


Political and Legal Changes
Political and legal changes have had a great
impact on the service sector in countries like the
former USSR and the Republic of China.
President Gorbachev of the USSR in the early
1990s were aimed at revolutionizing the economy
of the country
socialist economy to a mixed economy where
capitalism has also found its ground

Policy Changes
Opening up of the economy has paved the way for
the Indian service organizations
IT and IT enabled services to expand their markets.
Realizing the importance of telecommunications
infrastructure for the growth of the economy, the
Government of India began to deregulate the
telecommunications sector in 1993.
India's new EXIM policy also seeks to encourage the
growth of the service sector in the country . The latest
changes to the policy announced in January 2004
allow duty-free import of professional equipment
which is expected to benefit the hospitality industry
and also encourage the growth of the service export
sector.

Challenges and Issues in Services
Marketing
Managing differentiation among services
Managing productivity
Managing service quality
Defining and improving quality
Ensuring the delivery of consistent quality
Designing and testing new services
Communicating and maintaining a consistent image
Accommodating fluctuating demand
Motivating and sustaining employee commitment
Coordinating marketing, operations, and human
resource efforts
Setting prices
Finding a balance between standardization versus
customization

MYTHS OF SERVICES
Myth 1: Service is a necessary evil for manufacturing
firms
Myth 2: The service sector is labor-intensive and less
productive
Myth 3: Service firms earn less revenue when
compared to the other two sectors
Myth 4: Growth in the service economy is linked to
the growth of the public sector services
Myth 5: Marketing a service is different from
marketing a product
Myth 6: Growth in the service sector eliminates jobs
from the manufacturing sector