One of the Chapters of an MBA Course Series on Services Marketing under Marketing Management that is tought at the B-Schools in India. This chapter is the Introduction (Part-2) which deals with How to market "Services"

1. SERVICES MARKETING
Chapter – 2 :
Nature of Services Marketing

2. Category of Services
• Services Industries and Companies :
Healthcare, Hotels, Hospitality,
Transportation, Education
• Services as Products : Normally sold with
goods as accompanying services, like gift
wrapping, training and grooming
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3. Category of Services
• Customer Services : Provided to support
the core product, like cars are sold along
with the periodical services.
• Derived Services : This is comparatively a
new concept where any goods are always
associated with some kind of service, like
a pharmaceutical provides medical
services, a razor provides grooming
services, a computer provides information
services, etc.
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4. Classification of Services
• Degree of Involvement of the Customer :
• Service Tangibility :
• Skills and Expertise required :
• The Business Orientation of Service
Provider :
• The Type of End User :
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5. DEGREE OF INVOLVEMENT OF
THE CUSTOMER :
• People processing : Customer’s presence
at the place of delivery required to
consume the service, like a training
workshop, a dance class, health care, etc.
• Possession Processing : The customer’s
presence is not required but his
possession or property needs to be
deposited for service, like car
servicing/repair, TV/VCD repair, laundry,
courier service, etc.
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6. DEGREE OF INVOLVEMENT OF
THE CUSTOMER :
• Mental Stimulus Processing : Here the
customer’s mental attention is required if not
physical presence in order to experience the
service, like career counselling, advertising,
consultation and education services, etc.
• Information Processing : In this case, data,
information, knowledge are gathered and
analysed for the use of the clients, like
research studies, market surveys, data
processing, accounting, legal services,
programming, etc.
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7. SERVICE TANGIBILITY :
• Highly Tangible : The service includes a
physical product (highly tangible) for use
during the contract period, like the cell
phone or a house on rent.
• Service Linked To Tangible Goods : These
are the guaranty or warranty periods,
during which the sellers provide free or
subsidised service to the customer, like
machines, vehicles, gadgets, etc.
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8. SERVICE TANGIBILITY :
• Tangible Goods Linked to Services : Here
some physical goods are given to the
customer as the part of a service, like
food with a train/air ticket, hotel
accommodation includes morning
breakfast, etc.
• Highly Intangible : Here no products are
offered as a part of the services, like hair-
cuts, body-massage, cinema, etc.
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9. SKILLS AND EXPERTISE
REQUIRED :
• Professional (High Skill) Services : These
services require a high level of qualification
and training to provide the services, like
doctors, lawyers, pilots, IT professionals, etc.
• Non-Professional (Low Skill) Services : These
services don’t require any special
prerequisites in skills, and can be performed
by anybody with some practice, like office
security guards, baby sitting, courier
delivery boys, etc.
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10. THE BUSINESS ORIENTATION OF
SERVICE PROVIDER :
• Commercial Organisations (Profit
Oriented) : The main objective here is to
make a profit by providing service. They
strive to do all that are required to earn a
profit by keeping the customers satisfied.
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11. THE BUSINESS ORIENTATION OF
SERVICE PROVIDER :
• Non-Profit Organisations (Service
Oriented) : The main objective here is to
serve the target clientele, without any
profit motive. Of course money is needed
for running such an organisation, and that
is obtained from public donation, trust
fund, or govt aid. This category includes
Govt. bodies and also no-profit-no-loss
organisations. Schools, NGOs, welfare
societies, disaster relief organisations.
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12. THE TYPE OF END USER :
• Consumer Services (B2C) : This is between the
service provider (the company) and the individual
customer for his personal consumption, like
medical treatment, fitness services.
• Business to Business (B2B) : This is between two
companies, like a company hiring another to do a
market research for it.
• Industrial Services : This is the case where a
manufacturing company buys services from a
service provider like supply, erection,
commissioning, maintenance of the plant and
machinery.
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13. CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
Because of the inherent nature of Services,
the marketers face several distinctive
challenges. Service marketers strive to
answer the following questions and try to act
accordingly :
1. How can service quality be defined and
improved - when the product is intangible
and non-standardised ?
2. How can new services be designed and
tested effectively - when the service is
essentially an intangible process ?
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14. CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
3. How can the firm be certain that it's
communi-cating a consistent and
relevant image - when so many elements
of marketing mix communicate to
customers and some of these elements
are the service providers themselves ?
4. How can the firm accommodate
fluctuating demand - when capacity is
fixed and the service itself is perishable ?
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15. CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
5. How can the firm best motivate and
select service employees - who, because
the service is delivered in real time,
become a critical part of the product
itself ?
6. How should the prices be set - when it's
difficult to determine actual cost of
production and price may be inextricably
intertwined with perceptions of quality ?
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16. CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
7. How should the firm be organised so that
good tactical and strategic decisions are
made - when a decision in any of the
functional areas of marketing,
operations, HR, may have significant
impact on the other two areas ?
8. How can the organisation protect new
service concepts from competitors -
when the service processes can't be
readily patented ?
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17. CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
9. How does the firm communicate quality
and value to customers - when the
offering is intangible and can't be readily
tried or displayed ?
10.How can the organisation ensure the
delivery of consistent quality service -
when both the firm's employees and the
customer themselves can affect the
service outcome ?
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18. CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
11.How can the balance between
standardisation and personalisation
(customisation) be deter-mined to
maximise both the efficiency of the
organisation and the satisfaction of its
customers ?
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19. Marketing Mix
Product
• Physical Goods
Features
• Quality Level
• Accessories
• Packaging
• Warranties
• Product Lines
• Branding
Price
• Flexibility
• Price Level
• Terms
• Differentiation
• Discounts
• Allowances
• Pay Mode :
• Cash
• Credit
• Loan
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20. Marketing Mix
Place
• Channel Type
• Exposure
• Intermediaries
• Outlet Locations
• Transportation
• Storage
• Managing Channels
Promotion
• Promotion Blend
• Sales People :
• Selection
• Training
• Incentives
• Advertising :
• Media Types
• Types of Ads
• Sales Promotion
• Publicity
• Internet/Web Strategies
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21. Extended Marketing Mix for Services
People
• Employees :
• Recruiting
• Training
• Motivation
• Rewards
• Teamwork
• Customers :
• Education
• Training
Process
• Flow of Activities :
• Standardised
• Customised
• No. of Steps :
• Simple
• Complex
• Customer
Involvement
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22. Extended Marketing Mix for Services
Physical Evidence
• Facility Design
• Equipment
• Signage
• Employee Dress
• Other Tangibles :
• Reports
• Business Cards
• Statements
• Guaranties
Productivity & Quality
• Service Quality
• Maintaining :
• Service Quality
Level
• Trade-off between :
• Incremental Cost
• Incremental
Revenue
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23. KEY MARKETING ISSUES BEFORE
A SERVICE ORGANISATION
• Managing Productivity :
• Managing Service quality :
• Managing Differentiation :
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24. Managing Productivity :
• Service firms have several type of
functional activities to look after. And
these are done by people mostly and in
some specific areas by machines.
• So productivity and efficiency are the key
words here. The same people handling
variety of activities have to be trained and
effectively deployed.
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25. Managing Service Quality :
• It’s simple to say that the superior quality of
services will offer a competitive advantage
over the competitors’. But to achieve this is
difficult for the quality can’t be tested nor
measured.
• Fortunately all the modern day management
tools and procedures are available like flow
chart, CPM, quality systems, process quality
control, analyses of failure points, marketing
surveys, attitude surveys and measurement,
etc.
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26. Managing Differentiation :
• The intangible nature of services make it
difficult for the service firms to
differentiate their services from that of
their competitors except on the basis of
price. Then how do they do it.
• They try to throw in some tangible element
which may attract the customers or help
them compare with that of the
competitors. They carefully identify such
elements and decide what proportion to
be used as follows :
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27. Managing Differentiation :
• Service Premises : This is nothing but the
environment which is important for the
services where the customers visit the
service providers. The image, outlook,
presentation and ambience of the place
of service delivery play a very critical role.
The following are some elementary
factors :
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28. Managing Differentiation :
–The Lighting Arrangement : Good lights,
anti-glare set-ups,
–The Visual Aspects : Interior decoration,
art objects,
–The Sound of Music : Piped music,
soothing music,
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29. Managing Differentiation :
–The Fragrance of Incense : Scent of
flowers, room fresheners,
–The Layout Plan : Convenient
movement, flow of process, safety,
floors,
–The Acclimatiser : AC, humid control,
fresh air, healthy environment, insect-
free,
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30. Managing Differentiation :
• Packaging : Where customers’ properties
are involved, the use of good and
attractive packaging is an effective
differentiation.
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31. Managing Differentiation :
• Service Personnel : since service personnel
are in direct contact with the customers, they
should be presentable. Nobody likes a bunch
of dirty smelling, ill dressed service
personnel. So they are trained to groom
themselves, improve appearance, neat and
clean, smart, figure conscious, dressed for
the occasion, etc. On the other side we have,
good mannerism, courteous behaviour,
smiling face, enthusiastic actions of the
personnel are critical assets.
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32. Managing Differentiation :
• Tools and Equipment used : Several
service types need the use of different
equipment and tools. So the use of
advanced and sophisticated tools and
equipment has an edge over the
competitors.
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33. Managing Differentiation :
• Customers : Some service firms like to
cater to only discerning customers. They
differentiate the customers on the basis
of level of refined workmanship (finesse),
and then design services for them. Thus
the firms not only address the physical
needs, but also the psychological needs.
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34. Managing Differentiation :
• Convenience : The firms cater to the
convenience of the customers, by going
to their doorstep or to the proximity. Like
car driving trainers pick up the customers
from home and drop back at home, taking
food order thro’ telephone and delivering
at home. The customers are benefited by
saving time, and also by the pleasant
gesture of the service providers.
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35. Managing Differentiation :
• Name of the Service Establishment : Many
think “what’s in a name”, but mostly the
name itself can create a first impression,
and also the general level of comfort in
the customers, of course in both
positively and negatively.
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36. NEW AVENUES IN SERVICES
MARKETING
• Trade Fairs and Shows : These are used
for attracting prospects and to find out
their exact area and level of service
expectations, new ideas, or response to
new ideas, etc.
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37. NEW AVENUES IN SERVICES
MARKETING
• Internet and World Wide Web (www) :
Perhaps the most revolutionary
technological advancements to have
happened in the 20th. Century is the
Internet and World wide web. By this both
the provider and the consumer are close
to each other, in fact all are closer today.
Providing this facility itself is a huge
service, thro’ which almost every service
has some benefit.
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38. NEW AVENUES IN SERVICES
MARKETING
• Information Technology and computers :
This again has become the part and
parcel of our lives today. Any service
related to this is in enormous proportion.
• Advanced Communications : Refinement
and advancements in telecommunication
shows great opportunities for service
providers to exploit.
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39. THE END
© Himansu S M / 25-Aug-2011
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