3. Topics to be covered
Introduction
Difference between product and services
marketing
Augmented marketing mix
Characteristics of services
Classification of services
4. Introduction
Many businesses that were once viewed as a manufacturing giant are
shifting their focus towards services
IBM purchased PWc to gain broader strategic service consulting
expertise
IBM states that it is the largest service business in the world
200,000 service professionals around the world
Many businesses outsourced their entire services function to IBM
Service side of IBM brings approximately $60 billion dollars
More than half of the revenues comes from services
Switching from manufacturing focus company to service company is a
challenge
IBM is focusing on service science and service innovation
Services are not limited to the service industry
5. What are services?
Services are deeds, processes and performance provided or
coproduced by one entity or person for another entity or person
IBM do provide these services
Repair and maintenance service for equipment
Consulting services
E-commerce applications
Training services
Web design and hosting
Other services
All economic activities whose output is not a physical product
or construction, is generally consumed at the time it is
produced and provides added value in forms(Convenience,
amusement, timeliness, comfort or health) that are essentially
intangible concerns of its first purchaser.
6.
7. Service Industries v/s service as a product
v/s customer service and derived service
Service industries and company
Whose core product is service
Taj mahal hotel
Air india
ICICI
SBI
Fortis healthcare
8.
9. Service Industries v/s service as a product
v/s customer service and derived service
Service as a product
Wide range of intangible product offerings
Sold by service companies and non service companies
IBM and HP is now competing with Accenture for consulting
services
Customer service
Service provided in support of a company’s core products
Generally do not charge for customer service
Should not be confused with services provided for sale by company
Derived service
All products and physical goods are valued for the services they
provide
Valued derived by the physical product is the service itself, not the
good
10. Tangibility spectrum
Intangibility is a key determinant of whether and
offering is a service
Very few products are purely intangible or totally
tangible
Fast food industry
Classified as service
Tangible components as food, the packaging and so on
Automobiles
Classifies as manufacturing sector
Also supply intangible as transportation and navigations
services
17. Why service marketing?
2) Service as a business imperative in goods-focused businesses
1) Manufacturing- GE, Caterpillar
2) Technology companies- Avent, Xerox, IBM
3) Retailers- Petsmart
4) Packaged goods- P&G
5) These companies discovered the potential of service-led growth
6) Xerox now provides a document management service
7) Petsmart started pet hotels, grooming and training
8) IBM purchased PWc
9) HP purchased EDS
10) Dell acquired Perot Systems
11) Commoditization of products has resulted in price and margin pressures
12) Customers are demanding services and solutions specially in B2B
13) Services have higher profit margins
14) Service can be differentiator in crowded market
18. Why service marketing?
3) Deregulated industries and professional service needs
1) Airlines, banking, telecommunications
2) Doctors, lawyers, architects etc
4) Service marketing is different
1) Service companies started hiring from other core marketing
companies like P&G and others
2) Experience gained in marketing a manufactured product is
not directly transferable here
5) Service equals profit
1) Value driven leadership
2) Commitment to investment in employee success
3) Trust based relationship
19. Is the marketing of services different? A
historical perspective
20. Why service marketing?
6. But “service stinks”
1. Consumers perceive that overall quality of service is
declining
2. With the tier system in companies according to the
profitability, some customers are getting less service than
before
3. Self service and technology interface reduces human
interaction
4. Automated voice systems, internet based services,
technology kiosks
5. Customer expectations is higher
6. Too lean and too understaffed to provide quality service
7. Less skilled people working in frontline service jobs
8. Talented workers soon got promoted
22. Service and technology
1) New service offerings
1) Automated voice mails, IVRS, fax machines, ATMs
2) Amazon and ebay
3) WSJ offers interactive edition
4) Connected car’s example for cars which can be used for shopping,
hotel reservations etc
2) New ways to deliver service
1) Providing existing services in more accessible, convenient,
productive ways.
2) Bill paying, online order tracking
3) Moved from face-to-face to telephone-based service to IVRS to
internet-based customer service
4) Now moved to wireless
5) Cisco offers all customer service and ordering virtually
23. Service and technology
3) Enabling both customer and employees
1) Online banking- customer can use their account and
transact, check balances, apply for loans etc
2) Through social media now companies and customers can
communicate
3) CRM software and sales support software aid the frontline
staff
4) Extending the global reach of services
5) The internet is a service
1) Its just one big service
6) The paradoxes and dark side of technology and service
1) On next slide
27. Characteristics of Services
Services tend to be more heterogeneous, more
intangible and more difficult to evaluate than
goods
On next slide
28.
29. Search, experience and credence qualities
Framework for difference b/w goods and services
Search qualities
Attributes a customer can determine before purchasing a product
Color, style, price, fit, feel, hardness and smell
Automobiles, clothing, furniture and jwelery
Experience qualities
Taste, wear-ability and comfort
Vacations and restaurant meals
Credence qualities
Consumer may find impossible to evaluate
Appendix operation, brake relining or computer software updates etc
Depends on expertise of the consumer
Check next slide
30.
31. Service marketing mix
Traditional marketing mix
Product
Price
Place
Promotion
Services are produced and consumed simultaneously service delivery people are involved in
real-time promotion
Expanded mix for services
Customer are part of service production process
Customer will be looking for tangible cues
Hotel- design of interiors and behavior of employees
People- all human actors who play a part in service delivery and thus the buyer’s perception:
namely the firm’s personnel, the customer, and other customers in the service environment
Physical evidence- the environment in which the service is delivered and where the firm and
customer interact, as well as any tangible components that facilitate performance or
communication of the service
Process- the procedures, mechanisms, and flow of activities by which the service is delivered-
the service delivery and operating systems
Next slide
