This is a compilation of introductory notes on Service Marketing with emphasis on meaning, evolution, universal nature of services, challenges to delivering services and finally basic insights into 7Ps of marketing from the perspectives of marketing of services.

1. SERVICE MARKETING
TEACHING SLIDES ON SERVICE MARKETING
BY
CHANDRA P RIJAL
PhD, MPhil, MBA
PROFESSOR OF MANAGEMENT SCIENCES
SENIOR BUSINESS DEVELOPMENT ADVISOR
ROLLING PLANS PVT. LTD.
KATHMANDU, NEPAL
February 22, 2014
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2. UNIT-WISE COURSE OF STUDY
UNIT 1: INTRODUCTION
UNIT 2: CONSUMER BEHAVIOR IN SERVICES
UNIT 3: CUSTOMER PERCEPTION ON SERVICES
UNIT 4: LISTENING TO THE CUSTOMER
REQUIREMENTS
UNIT 5: SERVICE DESIGN & STANDARDS
UNIT 6: EMPLOYEES’ ROLES IN SERVICE
DELIVERY
UNIT 7: PROMOTION AND PRICING OF
SERVICES
February 22, 2014
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3. UNIT 1: INTRODUCTION
1.Concept of Service Marketing
2.Development of Service Marketing
3.Differentiating Goods and Service Marketing
4.Challenges for Service Marketers
5.Triangle of Service Marketing
6.Service Marketing Mix
February 22, 2014
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4. 1. Concept of Service Marketing
 For building up our basic understanding about
service marketing, we should consider at least three
things – defining services, defining service
marketing, and recognizing the main marketable
service entities.
 So, let’s focus on understanding the basic concepts
on service, service marketing and main marketable
service entities.
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5. Defining Service …
 Simply speaking, service is the way how a provider or
producer acts by means of its deeds, processes or
performances so as to satisfy the expectations,
deprivations, motivations and unmet needs of the receivers
of the outputs of such deeds, processes or performances.
 Facebook provides with social networking features, The
British Airways offers with worldclass flight experiences,
Norvic Hospital offers quality healthcare solutions in
Nepal. These all are a few examples of services.
 The quality of such services relies on effectiveness of the
actions of the provider – the deeds, the way they are
produced – processes, and the effects they generate on
experiencing or consuming them – performances.
February 22, 2014
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6. Defining Service …
 A service may be referred to as an intangible and more
perishable component of any business offering – absolute
package as a core product or as an augmented form to
promote the tangible products.
 Normally, the production and consumption of services
takes place simultaneously.
 The purpose of creating such may be business as well as
purely service to the society.
 There is big difference between the services offered by
‘service not for profit’ organizations and ‘service at a cost’
organizations.
 Let’s consider ‘service at a cost’ proposition in business.
February 22, 2014
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7. Defining Service Marketing …
 The overall approach of generating awareness, interest,
desire and action (AIDA) to consume services that are put
on offer of the provider may be referred to as service
marketing.
 Communication of the core meaning, benefits, and
procedures of consumption of a service; making it
convenient for the reach of target customers; building a
sound in-bound and outbound logistics support system;
selection, development and promotion of an effective
service distribution network; and developing and
promoting systems visibility are a few integrated functions
related to marketing of services.
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8. Defining Service Marketing …
 Ordinarily, ‘service marketing’ can be linked to the overall
approach adopted by a firm to promote the service
component of its offering – no matter whether it is a core
offering or augmented one.
 The key functions related to marketing of services will
include branding and packaging of services, performing
advertising and publicity about the services on offer,
promoting the business partners that leverage marketing
and promotion of services across the markets, assessing the
service impact and customer satisfaction, and so on – as it
applies to marketing of tangible goods.
 In other words, service marketing refers to the overall
approach of promoting the marketable service entities.
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9. Main Marketable Entities
Can you justify with examples how these elements can
serve as marketing entities?
1. Goods or commodities
2. Services
Better, differentiate
3. Ideas
these in respect with -4. Events
a. tangibility,
b. perishability,
5. Places
c. transfer of ownership,
6. Persons
d. heterogeneity, and
7. Information
e. timing of production
and consumption?
8. Properties
9. Experiences
10.Know-how
February 22, 2014
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10. Main Marketable Service Entities
Can you justify with examples how these elements can
serve as marketing entities?
 Idea or concept
 Know-how
What is common in all these
entities?
 Experience
Commonality should be sought
 Event
in respect with –
 Campaign
a. Tangibility
b. Perishability
 Information
c. Transfer of ownership
 Technology
d. Heterogeneity
 Value addition
e. Timing of production and
consumption
February 22, 2014
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11. Implications of Intangibility
 Services cannot be inventoried.
 Services cannot be patented.
 Services cannot be readily displayed or
communicated.
 Pricing is difficult.
 Services cannot be physically handed over
the buyer after transaction.
 There will remain a long-term debate over
the ownership of services as they cannot be
fully separated from their maker.
February 22, 2014
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12. Implications of Heterogeneity
Service delivery and customer satisfaction depend
on employee actions.
Service quality depends on many uncontrollable
factors.
There is no sure knowledge that the service
delivered matches what was planned and
promoted.
Quality of delivered services will vary from person
to person delivering it.
Different customers will have varying level of
perception on delivered service quality.
February 22, 2014
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13. Implications of Simultaneous Production and
Consumption
Customers participate in the process and affect the
transaction.
Customers affect each other, a less satisfied
customer may affect adversely to a greater extent.
Employees affect greatly the service outcomes.
Mass production of services is quite difficult.
If not consumed immediately, many services turn
into big cost to the firm.
February 22, 2014
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14. Implications of Perishability
 It is difficult to synchronize supply and demand of
services.
 Services cannot be returned or resold.
 They cannot be stocked for future sale or use.
 Opportunity cost is always unpredictable.
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15. Value Added by Physical, Intangible Elements Helps Distinguish
Goods and Services
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16. Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 Cosmetics Fast-food
 Outlets

Tangible
Dominant
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
Fast-food
Outlets
Intangible
Dominant


Advertising
Agencies
Airlines
Investment
Management
Consulting
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


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Teaching

17. Main Marketable Service Entities
Can you justify with examples how these elements can
serve as marketing entities?
 Idea or concept
What is common in all
 Know-how
these entities?
 Experience
Commonality should be
 Event
sought in respect with –
a. Tangibility
 Campaign
b. Perishability
 Information
c. Transfer of ownership
 Technology
d. Heterogeneity
e. Timing of production
 Value addition
and consumption
February 22, 2014
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18. More Examples of Services…
1. What does an academic advisor do?
2. What services does a five-star hotel sell?
3. What services does your university and college
offer?
4. What does a cinema hall do?
5. What about The British Airways?
6. What does The Bir Hospital do?
7. What does KFC get in return of the process and
branding of its products throughout the world?
8. What does an internet café do?
9. What does a research firm do?
10. What does an after sales service firm do?
February 22, 2014
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19. A Few Examples of Service Industries
1. Health Care: hospital, medical practice, dentistry, eye
care, etc.
2. Professional Services: accounting, legal, architectural,
research and innovation, consulting, management
contracts, etc.
3. Financial Services: banking, investment advising,
insurance
4. Hospitality: restaurant, hotel/motel, bed and breakfast,
ski, resort, rafting, etc.
5. Travel: airlines, travel agencies, theme park, etc.
6. Public Service: national security, defense, general
administration, etc.
7. Social Service: politics, economic development,
NGO/INGO services, etc.
8. Education: all type of educational services, counseling,
coaching, teaching, etc.
9. Others: hair styling, pest control, plumbing, lawn
maintenance, counseling services, health club, etc.
February 22, 2014
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20. Discussion Questions…
1. Marketing of services is equally applicable
tangible goods and commodities as it applies to
intangibles. Comment.
2. Rather than being a separate discipline, service
marketing is an integral concept of marketing
itself. Comment and justify.
3. Define service marketing and give a few
examples of service entities that can be
marketed.
4. Discuss with examples the various sectors of
services.
February 22, 2014
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21. 2. Development of Service Marketing
What resulted in evolution of services?
1. Evolution of human being as a social entity required
services of others for living better lives.
2. The financial prosperity and well-being of people made it
realize the need of special services in which they could
spend their disposable money.
3. Changing behavior and values of people forced them
realize the need of services.
4. Felt importance of spending some portion of life in
pleasure, entertainment and leisure resulted evolution of
services as alternatives to it.
5. A range of survival needs also resulted in evolution of
services.
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22. What resulted in evolution of services?
6. To facilitate the challenges of material developments, it
required a number of services.
7. Various new inventions required to be attached with a
number of services.
8. More service sectors evolved to create jobs, empowerment
and employment as part of government and social
development missions.
9. Due to more educated and aware people, they got realized a
number of services required.
10.To meet the ever-increasing and ever-evolving unmet needs
of the human beings.
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23. Additional Reasons of Growth of Services
1. Evolution of service-based economies
2. Economic changes
3. Service as a business imperative in manufacturing and
IT
4. Increasing needs of professional services, especially in
hospitality, research and innovation
5. Industrial deregulation; political legal changes; policy
changes
6. Globalization
7. Socio-demographic changes
8. Technological changes
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24. A Few Evolutionary Landmarks of Services
Phase I: Argumentation (Prior to 1980s)
Phase II: Foundation Phase (1980 – 1985)
Phase III: Independent Phase (1986 onwards)
1. Can you explain what happened during these
phases? And why these phases are called
argumentation, foundation and independent?
2. Also discuss how the need of marketing of services
evolved as one of the core marketing concepts.
February 22, 2014
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25. More discussion questions…
Q1. Discuss briefly how service marketing evolved
passing across various stages of evolution of core
marketing concepts.
Q2. Rather than itself being a separate discipline,
service marketing may be referred to as an integral
component of evolution of the concept of marketing.
Comment.
Q3. Elaborate the various factors that resulted in
evolution of service marketing.
February 22, 2014
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26. 3. Differentiating Goods and Service Marketing
Use the bases of differentiation as given in the next
slide and discuss in class how these bases apply in the
cases of marketing of goods and services.
Try to figure out 2-3 differences per basis of
differentiation given here.
February 22, 2014
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27. 3. Differentiating Goods and Service Marketing
Let’s compare it from at least five perspectives…
Marketing of
Goods
?
Basis of
comparison
1. Tangibility
Marketing of
Services
?
?
2. Perishability
?
?
3. Timing of
production and
consumption
4. Separating from
its creator
5. Heterogeneity of
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offered quality
?
?
?
February 22, 2014
?
?
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28. 4. Challenges for Service Marketers
1. Since the services are intangible, it is quite difficult to
define and improve their quality.
2. Communicating and testing new services is always
complicated as they do not have any tangible form.
3. Communicating and maintaining a consistent image is
always a tough task.
4. Motivating and sustaining employee commitment to serve
the best is a highly complicated task.
5. Coordinating marketing, operations and human resource
efforts for best service delivery is another challenge.
6. Setting prices of services is very much difficult job.
7. Standardization and customization of services is difficult.
February 22, 2014
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29. 5. Triangle of Service Marketing
 It is a tri-logical concept advocating that
effectiveness of service delivery relies on three
integral elements – company that offers of owns
services, customers for whom the services are
targeted to, and the employees responsible for the
delivery of services.
 It all talks about how the company, its employees
and customers can work collectively for setting,
enabling and delivering the promises more
effectively.
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30. The Services Marketing Triangle
Company
(Management)
enabling the promise
Employees
setting the promise
Interactive Marketing
Customers
delivering the promise
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31. The Services Triangle and Technology
Technology connects all the agencies responsible in it.
Company or Management
Technology
Customers or Users
Employees or Providers
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32. Ways to Use the Services Marketing Triangle
Specific Service
Implementation
Overall Strategic
Assessment
1. How is the service
organization doing on all
three sides of the
triangle?
1. What is being promoted
and by whom?
2. Where are the
weaknesses?
3. Are the supporting
systems in place to
deliver the promised
service?
3. What are the strengths?
February 22, 2014
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2. How will it be delivered
and by whom?
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33. Discussion Question
Take for an example, a service company and try to
figure out the areas where the company
management, its employees and customers can work
collectively to enhance the relevance of quality of
services it delivers and also try to figure out a few
consequences if they failed to maintain a perfect
relationship.
February 22, 2014
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34. 6. Service Marketing Mix
 Product, price, place and promotion decisions are
referred to as traditional elements of marketing
mix.
 Service marketing mix goes three steps further as it
incorporates additional three elements including
people, physical evidence and processes involved
in production and consumption of services.
February 22, 2014
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35. 7 Ps in Service Marketing
1.
2.
3.
4.
Product
Price
Place
Promotion
Building Customer
Relationships
Through People,
Processes, and
Physical Evidence
5. People
6. Process
7. Physical Evidence
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36. Expanded Marketing Mix for Services
PRODUCT
PLACE
P R O M O T IO N P R IC E
P h y s ic a l g o o d
fe a tu re s
C h a n n e l ty p e
P ro m o tio n
b le n d
F le x ib ility
Q u a lity le v e l
E x p o s u re
S a le s p e o p le
P ric e le v e l
A c c e s s o rie s
In te rm e d ia rie s
A d v e rtis in g
T e rm s
P a c k a g in g
O u tle t lo c a tio n
D iffe re n tia tio n
W a rra n tie s
T ra n s p o rta tio n
S a le s
p ro m o tio n
P u b lic ity
P ro d u c t lin e s
S to ra g e
B ra n d in g
A llo w a n c e s

37. Expanded Marketing Mix for Services
PEO PLE
P H Y S IC A L
E V ID E N C E
PROCESS
E m p lo ye e s
F a c ility d e s ig n
F lo w o f a c tivitie s
C u s to m e rs
E q u ip m en t
N u m b e r o f s te p s
C o m m u n ic a tin g
c u ltu re an d va lu es
S ig n a g e
L e ve l o f c u s to m e r
in vo lve m e n t
E m p lo ye e re s e a rc h
E m p lo ye e d re s s
O th e r ta n g ib le s

38. Ways to Use the 7 Ps
Overall Strategic
Assessment
Specific Service
Implementation
1. How effective is a firm’s
services marketing mix?
2. Is the mix well-aligned with
overall vision and strategy?
3. What are the strengths and
weaknesses in terms of the
7 Ps?
1. Who is the customer?
2. What is the service?
3. How effectively does the
services marketing mix for a
service communicate its
benefits and quality?
4. What changes or
improvements are needed?
February 22, 2014
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39. Discussion Question
Take for example, a service related offering of a
company and closely identify and analyze the various
aspects in line with 7Ps related to this offering. Also
explore different problems, challenges or issues
aligned to managing the mix of these 7 elements of
selected service.
February 22, 2014
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40. Discussion Question
Thank You !
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