SERVICE MARKETING
Aug – Dec. (2008)
SERVICES
“Service is an act or performance offered by
one party to another that is essentially
intangible and does not result in the
ownership of anything.”
TRENDS IN SERVICES SECTOR
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Service industry known as tertiary industry (primary
– agri, mining; secondary – manufacturing)
Share of services, industry, and agriculture in India's
GDP is 55.1 per cent, 26.4 per cent, and 18.5 per
cent respectively
A KPMG survey of BRIC countries (Brazil, Russia,
India and China), has revealed highest confidence
among the service sector in India with 60% of the
Indian firms expect rise in activity, a few notches
above than that of China
TRENDS IN SERVICES SECTOR
Factors contributing to growth:
1. Government Policies
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Govt. regulations,
Privatisation
2. Social Changes
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Rising customer expectations
More affluence
Increased desire for buying experiences vs products
TRENDS IN SERVICES SECTOR
Factors contributing to growth:
Business trends
3.
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Mfrs. Adding value through services
Quality Movement
Growth of franchising
Advances in Information Technology
4.
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Growth of internet
Convergence of computers & telecommunications
Internationalisation
5.
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More cos. operating on transnational basis
International mergers & aquisitions
TRENDS IN SERVICES SECTOR
The various sectors that combine together to constitute service
industry in India are:
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Trade
Hotels and Restaurants
Railways
Other Transport & Storage
Communication (Post, Telecom)
Banking
Insurance
Dwellings, Real Estate
Business Services
Public Administration; Defence
Personal Services
Community Services
Other Services
TRENDS IN SERVICES SECTOR
While almost all service sectors
participated in this boom, growth was
fastest in communications, banking,
hotels and restaurants, trade and
business services.
INTERNAL SERVICES
Service elements within an organization that facilitate
creation of--or add value to--its final output
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Includes:
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accounting and payroll administration
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recruitment and training
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legal services
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transportation
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catering and food services
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cleaning and landscaping
Increasingly, these services are being outsourced
GOODS AND SERVICES
Differences between goods & services
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Customers do not obtain ownership of services
Service products are ephemeral & cannot be
inventoried
Intangible element
Customers maybe involved in production process
Other people part of product
GOODS AND SERVICES
Differences between goods & services
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Greater variability in operational inputs &
outputs
Services are difficult for customers to
evaluate
Time factor assumes more importance
Distribution channel take different forms
Hi
Value Added by Tangible vs
Intangible Elements in Goods
and Services
Salt
Soft drinks
CD Player
Golf clubs
New car
Tailored clothing
Furniture rental
Fast food restaurant
Lo
Plumbing repair
Office cleaning
Health club
Airline flight
Retail banking
Insurance
Weather forecast
Intangible Elements
Hi
CLASSIFICATION OF SERVICES
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A significant classification is based on
process (taking an input & transforming into
an output)
Marketers of services need to understand
nature of services to which customers are
exposed
Services range from simple procedures to
highly complex activities
CLASSIFICATION OF SERVICES
People
Possession
People Processing
Possession processing
- Passenger transportation
- Freight transportation
- Health care
- Repair & maintenance
- Lodging & Restaurant
- Retail distribution
Tangible
actions
Mental stimulus
- Advtg. & PR
- Education
- Entertainment & Arts
Intangible
actions
Information processing
- Accounting & Bkg
- Insurance & Legal
- Software Consulting
CLASSIFICATION OF SERVICES
1.
People processing
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Customers must physically enter the service
system as they are integral part of process
They must spend time interacting & cooperating with service providers
Process & output is important
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CLASSIFICATION OF SERVICES
2.
Possession processing
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Providing treatment to possession. Customers less
physically involved
Customer’s involvement – to drop item that needs
treatment, requesting the service, explaining
problem & later picking it up & paying the bill.
If object to be processed is difficult to move then
“service factory” comes to customer
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CLASSIFICATION OF SERVICES
3.
Mental stimulus processing
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These services interact with the customer’s minds
which has the power to shape their attitude &
behaviour. Core content is information
Customers not physically present, but mentally
connected with information presented.
Recipients have to make investment of time
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CLASSIFICATION OF SERVICES
4.
Information processing
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Information is most intangible but can be made
tangible by letters, reports, books
Financial & professional services are strong
examples of collection & processing of information
No requirement of personal contact with supplier of
service. Contact could be over e-mail, telephone.
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IMPLICATIONS OF SERVICE PROCESS
1. Designing Service Factory (people proc.)
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When customers have to be physically present
throughout delivery, process must be designed with
them in mind – right from the moment they arrive
the service factory.
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Choose convenient location
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These factors assume importance
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exterior & interior facilities,
encounters with service personnel,
interactions with self-service equipment
characteristics of other customers
IMPLICATIONS OF SERVICE PROCESS
2.
For possession-processing, mental-stimulus processing,
or information processing services, alternatives include:
1. Customers come to the service factory
2. Customers come to a retail office
3. Service employees visit customer’s home or workplace
4. Business is conducted at arm’s length through
- physical channels (e.g., mail, courier service)
- electronic channels (e.g., phone, fax, email, Web site)
IMPLICATIONS OF SERVICE PROCESS
3.
Making most of Information Technology
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All services can benefit from IT, but mental
stimulus processing and information- processing
services have the most to gain.
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Remote delivery of information-based services
“anywhere, anytime”
New service features through websites, email, and
internet (e.g., information, reservations)
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More opportunities for self-service
IMPLICATIONS OF SERVICE PROCESS
4.
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Balancing Supply & Demand
Problems arise because service output can’t be
stored
If demand is high and exceeds supply, business
may be lost. If demand is low, productive capacity
is wasted
Services that process people & possession face
more capacity limitations. Increasing capacity
entails huge costs. Managing demand becomes
more important.
IMPLICATIONS OF SERVICE PROCESS
5.
People becoming part of Product
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When people become part of service, their
attitude, behaviour & appearance can
enhance it or detract it
Managers should be concerned about
employees’ appearance, social skills,
technical skills
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SERVICES MARKETING MIX
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Product
Place & Time
Promotion & Education
Price
Physical Environment
Process
People
INTERDEPENDENCE OF
MARKETING, OPERATIONS & HR
Operations
Management
Marketing
Management
Customers
Human Resources
Management
SERVICE BUSINESS – AS A SYSTEM
Three Overlapping Sub-systems
Service Operations (front stage and backstage)
 Where inputs are processed and service elements created.
 Includes facilities, equipment, and personnel
Service Delivery (front stage)
 Where “final assembly” of service elements takes place
and service is delivered to customers
 Includes customer interactions with operations and other
customers
Service Marketing (front stage)
 Includes service delivery (as above) and all other contacts
between service firm and customers
SERVICE MARKETING SYSTEM
High Contact Service
Service Delivery System
Other Contact Points
Service Operations System
Other
Customers
Interior & Exterior
Facilities
Technical
Core
Equipment
The
Customer
Service People
Backstage
(Invisible)
Front Stage
(Visible)
Other
Customers
Advertising
Sales Calls
Market Research
Surveys
Billing / Statements
Miscellaneous Mail,
Phone Calls, Faxes, etc.
Random Exposure to
Facilities / Vehicles
Chance Encounters
with Service Personnel
Word of Mouth
SERVICE MARKETING SYSTEM
Low Contact Service
Service Delivery System
Service Operations System
Other Contact Point
Advertising
Mail
Technical
Core
Self Serv.
Equipment
Customer
Customer
Market Research
Surveys
Word of Mouth
Phone,
Website
Backstage
Front stage
Theatre – A Metaphor for Service
Delivery
• Service facilities is the stage on which
drama unfolds. Some cases customer’s
own facilities provide stage.
• Stage can have minimal props or very
elaborate
• Service dramas could be tightly scripted or
improvisational
• Settings change from one act to another
• Front stage personnel play roles of actors
( sometimes wearing costumes) supported
by backstage production team
SERVICE PLANNING
SERVICE PLANNING
Corporate Objectives
and Resources
Marketing Assets
Operating Assets
(Customer Base, Mkt. Knowledge,
Implementation Skills, Brand Reput.)
(Facilities/Equipment, IT Systems,
People, Op. Skills, Cost Structure)
Service Marketing Concept
Service Operations Concept
•Benefits to customer from core/
supplementary elements, style,
service level, accessibility
•Nature of processes
•Geographic scope of ops
•Scheduling
•Facilities design/layout
•HR (numbers, skills)
•Leverage (partners, self-service)
•Task allocation: front/backstage
staff; customers as co-producers
•User costs/outlays incurred
•Price/other monetary costs
•Time
•Mental and physical effort
•Neg. sensory experiences
Service Delivery
Process
SERVICE PLANNING
1. Starts with statement of objectives or
mission at corporate leve
2. This mission leads to two types of
analysis – SWOT Analysis identifying
strengths, weaknesses, opportunities &
threats on marketing & operations fronts
– Market & Competitive Analysis
– Resource Allocation analysis – appraisal of
firm’s resources, how to allocate them &
identifying additional resources
SERVICE PLANNING
3. Each analysis draws two statement of
assets
a. Marketing assets statement which
includes – customer portfolio, market
knowledge, marketing implementation
skill, product line, reputation of brands &
positioning strategies.
b. Operating assets statement which
includes – Physical facilities, equipment,
Information technology, H.R. (numbers &
skill), alliances & partnerships, cost
SERVICE PLANNING
4. Statement of assets leads to creation of
the following concepts. This must be an
interactive process.
a. Service marketing concept to clarify
benefits to customers & costs they shall
incur
b. Service operating concept clarifies
nature of processes & how & when
operating assets should be deployed
5. Set of choices before the management in
configuring delivery process.