Positioning of Marketing of

Services
Why integration of marketing and
operations?
In a goods mfg. company
Operations designs, manufactures and
ships to warehouses or retails
Marketing takes over to carry out sales,
collections, promotion and advertisement.
Marketing becomes a link between the
Operations and the customers
Operations and Marketing well defined
functions. Both do not interact frequently
and seldom before customers
In Services
Operations carry out service design,
processes, delivers.
Marketing is limited to promotion and
advertising
Operations is core function. There is heavy
overlap and a high need of coordination
and cooperation and hence integration
Basic difference
Most Goods are first produced, then sold
and then consumed
Most services are first sold, then produced
and consumed simultaneously
Production of service (operations issue),
consumption (marketing issue) are
inseparable, are integrated and change
the role of marketing in a firm
Five major differences in Goods
and Services Marketing
1. Output Tangibility:
In goods marketing attempts to enhance
abstract association (youth for coke,
nutritious food)
In services opposite strategy is needed
(umbrella for insurance, blanket
protection)

2. Organizational features: Services marketing
has two components:
Service interface marketing: It is predominant in
personal services. These are small, high contact
firms that is impersonal or mass service.
Marketing is small or non-existent
Functional marketing: It is predominant for
impersonal services as also for mfg. firms where
large, low contact is needed. Marketing is formal
and well established
Fig. page 129

3. Ownership, Use and Consumption:
As against goods, services are not
owned; services are used/consumed for
limited time.
Focus of marketing is on service itself ( not
on selling of perfume but on fantasy)

4. Scope of marketing activities:
Traditionally, 4 Ps of Product, Price, Place
and Promotion are considered in goods
oriented marketing
Services marketing includes additionally
Participants (employees and customers)
Physical evidence (building, uniforms, )
Process( procedures, flow of activities in
providing service)
5 The Consumers Role:
Consumer behavior for services is more
difficult subject of study as he might be
involved in design and delivery of service
Purchase and consumption are simultaneous,
therefore his behavior during encounter must
be also considered
Most services are evaluated on quality and
performance after experience
Three Criteria of evaluating quality
by a customer
Search quality: attributes consumer searches
before purchase, colour, size, fit, feel, smell,
price, service facility
Experience quality: can be determined after
purchase or during consumption-taste, pain,
pleasure, comfort,
Credence quality: consumer is unaware or
lacks technical knowledge even after
consumption as car repair, medical operations

Service-Profit chain
Research establishes a strong relationship
between customer satisfaction and
profitability. However in services, a strong
link has been found between customer
retention and profitability
Heskets 7 propositions on
Service profit chain
1. Profit and growth are linked to customer loyalty
2. Customer loyalty is linked to customer
satisfaction
3. Customer satisfaction is linked to service value
4. Service value is linked to employee
productivity
5. Employee productivity is linked to loyalty
6. Employee loyalty is linked to employee
satisfaction
7. Employee satisfaction is linked to internal
quality of work life
Internal Quality of life
Workplace design
Job design
Decision making latitude
Selection and development
Rewards and recognition
Information and communication
Adequate tools to serve customers
Fig. 6.6 page 141
Customer satisfaction and loyalty
(retention) are not linear
Why customers switch
1. Pricing
High price
Price increases
Unfair pricing
Deceptive pricing
2. Inconvenience
Location/hours
Wait for appointment
Wait for service
3. Core service failure
Service mistakes
Billing errors
Service catastrophe
4. Service encounter failure
Uncaring
Impolite
Unresponsive
Unknowledgeable
5. Employee response to service
failures
Negative response
No response
Reluctant response
6. Attraction by competitors
Found better service

7.Ethical problems
Cheat
Hard sell
Unsafe
Conflict of interest
8.Involuntary switching
Customer moved
Provider closed