INTRODUCTION
SELL THE FOLLOWING PRODUCTS
Salt
 Soft Drinks
 Detergents
 Automobiles
 CosmeticsFast-food
 Outlets


Fast-food
Outlets
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching





Characteristics of
Services Compared to Goods
Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption
(Inseparability)
Perishability
Characteristics of Services Compared to Goods
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 CosmeticsFast-food
 Outlets

Tangible
Dominant

Intangible
Dominant
Fast-food
Outlets
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching







An act or performance performed by one
party to another
An economic activity that does not result in
ownership

Health Care
◦ hospital, medical practice, dentistry, eye care

Professional Services
◦ accounting, legal, architectural

Financial Services
◦ banking, investment advising, insurance

Hospitality
◦ restaurant, hotel/motel, bed & breakfast

Travel
◦ airline, travel agency, theme park

Others
◦ hair styling, pest control, plumbing, lawn maintenance, counseling services,
health club, interior design
Chirstopher Lovelock :
Services are economic activities offered by
one party to another, most commonly
employing time-based performances to bring
about desired results in recipients themselves
or in objects or other assets for which
purchasers have responsibility.
PRODUCTION
STORAGE
SALE
CONSUMPTION
SALE
PRODUCED &
CONSUMED AT SAME
TIME
Problems
Solutions
• Use of tangible clues
• Lack of service
inventories
• Use of personal source
of information
• Lack of patent
protection
• Creation of a strong
organizational image
• Difficulty in displaying
or communicating
services
• Difficulty in pricing
services
Problems
• Physical connection
• Involvement of
customers in the
production process
• Involvement of other
customers in the
production process
• Special challenges in
mass production
Solutions
• Selecting & training
public contact
personnel
• Consumer management
• Use of multi-site
locations
Problems
• Difficult to standardize
service quality control
Solutions
• Customization
• Standardization
Problems
• Higher demand than
maximum availably
supply / optimal supply
level
• Lower demand than
optimal supply level
• Demand & supply at
optimal levels
Solutions
• Creative pricing
• Reservation system
• Development of
complementary services
• Development of non
peak demand


Customer has access to but not ownership of
activity or facility
Stress advantages of non-ownership (eg.
Easier payment systems)
Basis
Goods
Services
Tangibility
Goods are tangible.
Can be patented
Services are
intangible. Cannot be
patented
Transfer of ownership
Possible
Not possible
Perishability
Less Perishable. It can
be stored as inventory
Highly perishable.
Cannot store for
future use
Heterogeneity
Goods can be
standardized. Less
heterogeneity
High heterogeneity.
Difficult to
standardize
Reselling
Possible
Not possible
Production &
consumption
Takes place at
different places
Both process take
place simultaneously
Basis
Goods
Services
Customer relationship
Low
High
Marketing mix
4 P’s – Traditional
marketing mix
7 P’s – Extended
marketing mix
Customer Involvement
Low
High
Mass Production
Easy
Difficult
Economy
Agriculture
Industrial
Services
Crawling out stage prior to 1980
Marketing channels
Marketing theories
Identified characteristics of services
2. Scurrying about stage : 1980-1986
- Services classification
- Managing quality in service operations- GAP
model
- Expanded marketing mix
- Service encounter, Relationship marketing,
Internal marketing etc.,
- Emergence of Service marketing
1.
3. Walking erect stage : 1986-2000
Focus on marketing problems of services
Service encounters, Service design, perceived
service quality, customer satisfaction,
Internal marketing & Relationship
marketing.
4. Galloping stage : 2000 till date
Increase in growth of service sector
Main contributors to GDP of the country.
Service Sector
Related activities
Wholesale and Retail trade
Sales to business / individuals
Transportation & Warehousing
Transportation or storage. Modes :
Air, Water, Rail, Road & Pipeline
Utilities
Establishments that provide
electricity, natural gas, steam,
water, sewage removal
Information
Establishments that produce and
distribute information and provide
the means to distribute or transmit
these products and / or process
data
Financial Activities
Finance & Insurance
Engaging in financial transactions
Real estate, rental & leasing
Selling or allowing the use of
assets
Government
Public Administration
Service Sector
Related Activities
Professional & Business Services
Professional, scientific & technical
Legal advice, accounting,
architectural, engineering,
computer services, consulting,
health care, research & others
Management of companies and
enterprises
Undertake a decision making role
in the company or enterprises
Administrative support & Waste
management
Performing routine support
activities for other organisation
Education & health services
Education
Provide instruction & training
Health care and social assistance
Provide medical care & social
assistance
Leisure & Hospitality
Arts, entertainment & recreation
Accommodation & food services
Services to meet cultural,
entertainment and recreational
interests
Social
Changes
Government
Policies
Business
Trends
Advances
in IT
Globalization
● New markets and product categories
● Increase in demand for services
● More intense competition
Innovation in service products & delivery systems, stimulated by better
technology
Customers have more choices and exercise more power
Success hinges on:
● Understanding customers and competitors
● Viable business models
● Creation of value for customers and firm
Social
Changes
Business
Trends
Advances in
IT
Government
Policies
Globalization
● Changes in regulations
● Privatization
● New rules to protect customers,
employees, and the environment
● New agreement on trade in services
Social
Changes
Business
Trends
Advances in
IT
Government
Policies
Globalization
● Rising consumer expectations
● More affluence
● Personal Outsourcing
● Increased desire for buying experiences vs.
things
● Rising consumer ownership of high tech
equipment
● Easier access to more information
● Migration
● Growing but aging population
Social
Changes
Business
Trends
Advances in
IT
Government
Policies
Globalization
● Push to increase shareholder value
● Emphasis on productivity and cost savings
● Manufacturers add value through service and
sell services
● More strategic alliances
● Focus on quality and customer satisfaction
● Growth of franchising
● Marketing emphasis by nonprofits
Social
Changes
Business
Trends
Advances
in IT
Government
Policies
Globalization
● Growth of Internet
● Greater bandwidth
● Compact mobile equipment
● Wireless networking
● Faster, more powerful software
● Digitization of text, graphics, audio,
video
Social
Changes
Business
Trends
Advances
in IT
Government
Policies
Globalization
● More companies operating on transnational
basis
● Increased international travel
● International mergers and alliances
● “Offshoring” of customer service
● Foreign competitors invade domestic
markets
Increase in Affluence
More leisure time
Working women
Growth in population of DINKS
Greater life expectancy
Greater complexity of products
Greater complexity in life
Greater concern for resource
scarcity & Ecology
Increasing number of new product
Young generation
Cultural changes
Technology – Key driver
Consciousness of healthcare
Migration
Economic liberalization





Service Triangle Management Framework
Molecular Model
Servuction Model
Services triangle Marketing model
Six market model
Focus : Revenues & operating cost
Ignores : Role personnel play – customer
satisfaction & sustainable profits.
Beliefs :
Difficult to find good employees
Better to rely on technical machines / systems
Employees are indifferent, unskilled,
incapable of fulfilling any duties.
Focus : To serve customers / Service delivery
Beliefs : Firms should be organized
Framework : Depicts 6 key relationships
6 KEY RELATIONSHIPS
1.
2.
3.
Firms service strategy
communicated to the
customer
Service strategy
communicated to
firm’s employees
Focus on consistency
of service strategy &
systems developed to
run day to day
operations



4. Impact of organisational
system upon customers.
5. Importance of
organisational systems &
employee efforts
6. Customer/service
provider interaction.
MOMENTS OF TRUTH
( MOT )
The quality of these
interactions is the source
of customer satisfaction.
Jan Carlzon, CEO,
Scandinavian Airline System

Interaction between
customer and service
provider give rise to
service encounters or
critical incidents.

Pictorial representation of the relationship
between the tangible and intangible elements
of a firm’s operation

Depicts the factors that influence the service
experience
I a. Contact personnel
Eg. Parking attendants, Receptionist, hostesses
I b. Service providers
Eg. Waiter, Dentist, Physician, Instructors
Other
customers
Servicescape
Customer
Invisible
organizations
and systems
Contact
personnel/
Service
providers

II Other customers

III Invisible organisation systems
- Rules, regulations & processes upon which
organisation is based.
IV Servicescape
- Use of physical evidence to design service
environment
Ambient conditions : Eg. Room temperature&
Music
Inanimate Objects : Eg. Assist firm in
completing tasks such as furnishings &
business equipment
Physical evidence : Eg. Sign / symbols and
personal artifact
I The company
II The customer
III The provider (Internal customers)
Eg. Employees, franchisees, channel partners,
distributors, wholesalers, retailers etc.,
Game of promises
I External marketing : “Makes promises”
II Internal marketing : “Keeps promises”
III Interactive marketing : “Enables promises”
1.
2.
3.
4.
5.
6.
Customer Markets
Referral Markets
Influence Markets
Recruitment
Markets
Supplier Markets
Internal Markets
◦ Most service products cannot be inventoried
◦ Intangible elements usually dominate value creation
◦ Services are often difficult to visualize and
understand
◦ Customers may be involved in co-production
◦ People may be part of the service experience
◦ Operational inputs and outputs tend to vary more
widely
◦ The time factor often assumes great importance
◦ Distribution may take place through nonphysical
channels
I Marketing issues
A. Managing Differentiation
1. Services premises
2. Packaging
3. Service personnel
4. Tools and equipment use
5. Customers
6. Convenience
B. Managing productivity
C. Managing service quality
II Ethical issues
1. Aggressive promotion
2. Invasion of privacy
3. Misleading claims backed by poor service
performance
III Communication issues
1. Management of technology
2. Management for budgetary provisions for
communication
3. Management of communication content
Difference
 Most service products
cannot be inventoried
 Intangible elements
usually dominate
value creation
 Services are often
difficult to visualize &
understand
 Customers may be
involved in coProduction
Implications
 Customers may be
turned away
 Harder to evaluate
service & distinguish
from competitors
 Greater risk &
uncertainty perceived
 Interaction between
customer & provider;
but poor task execution
could affect satisfaction
Marketing-Related Tasks
 Use pricing, promotion,
reservations to smooth
demand; work with ops to
manage capacity
 Emphasize physical clues,
employ metaphors and vivid
images in advertising
 Educate customers on
making good choices; offer
guarantees
 Develop user-friendly
equipment, facilities &
systems; train customers,
provide good support
Difference
 People may be part of
service experience
 Operational inputs and
outputs tend to vary
more widely
 Time factor often
assumes great
importance
 Distribution may take
place through
nonphysical channels
Implications
 Behavior of service
personnel & customers
can affect satisfaction
 Hard to maintain quality,
consistency, reliability
 Difficult to shield
customers from failures
 Time is money;
customers want service
at convenient times
 Electronic channels or
voice telecommunications
Marketing-RelatedTasks
 Recruit, train employees to
reinforce service concept
 Shape customer behavior
 Redesign for simplicity and
failure proofing
 Institute good service
recovery procedures
 Find ways to compete on
speed of delivery; offer
extended hours
 Create user-friendly,
secure websites and free
access by telephone