Transcript Services include

Services Marketing
by
P Sivarajadhanavel
Chapter – 1
Introduction to Services
Objective
 Explain what services are and identify service trends
 Explain the need for special services marketing concepts and
practices
 Outline the basic differences between goods and services and
the resulting challenges for service businesses
 Introduce the service marketing triangle
 Introduce the expanded services marketing mix
What are Services
 Services are deeds, processes, and Performance
Definition of Services
– Services include “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
(such
as
convenience,
amusement,
timeliness, comfort, or health) that are
essentially intangible concerns of its first
purchaser”
Distinct categories of Services
– Service industries and companies
– Service as products
– Customer Service
– Derived Service
Distinct categories of Services
• Service industries and companies
– Whose core product is a service & considered pure service
companies
– Ex: Hotels, Airlines, Financial services, Insurance,
Healthcare etc..
• Service as products
– Intangible product offerings that customers value
and pay for in the market place
– Service products are sold by service companies
and by non service companies like manufacturing
and technology companies
– Ex: IBM, HP, TCS, etc
Contd…
• Customer Service
– Service provided in support of a company’s
core products
– Ex: Employees in airline industry providing
information and guiding them on boarding
• Derived Service
– Value derived from physical goods
– Ex: computer provide information and data
manipulation, razor provides barbering
services
Trends in the Service Sector
What is GDP
The market value of all final goods and
services produced within a country in a
given period of time.
It is also considered the sum of value
added at every stage of production of all
final goods and services produced within a
country in a given period of time.
GDP is a number that expresses the worth
of the output of a country in local currency
Various Sectors
• Agriculture
• Industry
– Mining and Quarrying
– Manufacturing
– Electricity, Gas and Water
• Services
– Trade, Hotels, Restaurants, Transport, Storage
and Communication
– Financing, Insurance, real Estate and Business
Services
– Community, Social and Personal Services
– Construction
Contribution of various Sectors in GDP of India
 In 2006-2007, India's GDP grew at an impressive 9.2
per cent.
 The share of different sectors of the economy in
India's GDP
 Agriculture - 18.5 per cent,
 Industry - 26.4 per cent, and
 Services - 55.1 per cent.
 Recently India joined the elite club of 12 countries with
a trillion dollar economy. The trillion dollar economy
includes
 US, Japan, Germany, China, UK, France, Italy,
Spain, Canada, Brazil, and Russia
 Source: http://www.indiaonestop.com/economy-macro-view.htm
Why Service Marketing
• Service Based Economies
• Service as a Business imperative in
Manufacturing and IT
• Deregulated industries and professional Service
needs
• Services Marketing is different
• Service equals profits
– Service profit chain – internal service and employee
satisfaction to customer value and ultimately to profits
• Service stinks
– American Satisfaction Index
Service- based Economies
• Country Name - % of services to its GDP
– United States - 78.6
– France
- 77.2
– Netherlands
- 73.9
– UK
- 73.4
– Japan
- 73.1
– India
- 60.7
– Brazil
- 54.0
– China
- 40.0
Service and Technology
• Potential for new service offerings
– Automated voice mail, interactive voice response systems, fax,
ATMs
• New ways to deliver service
– Delivering existing services in more accessible, convenient, &
productive ways
– Ex: bill paying, accounts, tracking orders, etc
• Enabling both customers and Employees
• Extending the global reach of services
– Today technology which takes services across the
globe
• The internet is a service
Services Vs Goods
Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
Perishability
Intangibility
 Generally, services cannot be seen, felt, tasted,
or touched in the same way as physical goods
Implications
 Services cannot be inventoried
 Services cannot be patented
 Services cannot be readily displayed or
communicated
 Pricing is difficult
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 Cosmetics Fast-food
 Outlets

Tangible
Dominant

Fast-food
Outlets
Intangible
Dominant


Advertising
Agencies
Airlines
Investment
Management
Consulting



Teaching
Heterogeneity
• Generally, no two services are exactly alike due to:
–
–
Customers
Employees
Implications
 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
Simultaneous
Production / Consumption
Goods
• Produced
Services
• Purchased
Purchased
Consumed
Consumed / Produced
simultaneously
Implications
 Customers participate in and affect the transaction
 Customers affect each other
 Employees affect the service outcome
 Decentralization may be essential
 Mass production is difficult
Perishability
• Services cannot be saved, stored, resold,
or returned
Implications
It is difficult to synchronize supply and
demand with services
Services cannot be inventoried
Recovery processes are critical
Challenges for marketing a Services
• Defining and improving quality
• Communicating and testing new services
• Communicating and maintaining a consistent
image
• Motivating and sustaining employee
commitment
• Coordinating marketing, operations and human
resource efforts
• Setting prices
• Standardization versus personalization
Service Marketing Mix
• Traditional marketing mix
• Expanded Mix for services marketing
Traditional Marketing Mix
•
•
•
•
Product
Place
Promotion
Price
Expanded Marketing Mix
•
•
•
•
•
•
•
Product
Place
Promotion
Price
People
Physical Evidence
Process
Expanded Marketing Mix
• Product – Physical good features, Quality
level, Accessories, Packaging, warranties,
product lines, Branding
• 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 strategy
• Price – Flexibility, price level, terms,
differentiation, discounts, allowances
Expanded Marketing Mix
• People – Employees (Recruiting, Training,
motivation, rewards, teamwork), Customers
(education, Training)
• Physical Evidence – Facility design,
equipment, signage, employee dress, other
tangibles (reports, business cards,
statements, guarantees)
• Process – Flow of activities (standardized,
customized), Number of steps (simple,
complex), Customer, involvement
The Services Marketing Triangle
Company
(Management)
Internal
Marketing
External
Marketing
“enabling the
promise”
Employees
“setting the
promise”
Interactive Marketing
“delivering the promise”
Customers
Focused on the Customer
• Service marketing is focused towards the
customers and customers satisfaction
• Service delivery and service quality
Reference
• Consulting
– http://commerce.nic.in/export-promotionSummary.pdf