SERVICES MARKETING

UNIT I
INTRODUCTION
Services marketingis a sub field
ofMarketingwhich covers the marketing
of both goods and services.
Services marketing typically refers to the
marketing of bothBusiness to
Consumer(B2C) andBusiness 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

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

telecommunications

importance
infrastructure

of
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

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