INTRODUCTION TO SERVICES

MARKETING
• At the end of this module the learning
outcomes are
• what is the concept of services ?
• why do we need to understand services
Marketing ?
• What is the basic differences between
Goods and Services ?
• What is the concept and importance of
Services Marketing Triangle ?
Hitesh Manocha Introduction to services 1
 INTRODUCTION TO SERVICES
MARKETING
Suggested Readings
1. Services Marketing by
Zeithmal & Bitner, Chapter 1
2. Services Marketing by
Christopher Lovelock, Chapter 1

Hitesh Manocha Introduction to services 2

 INTRODUCTION TO SERVICES
MARKETING

• What are services

• Services are
– Deeds
– Processes
– Performances
• Predominantly Intangible

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 INTRODUCTION TO SERVICES
MARKETING
Example
Education
• Interacting with students
• Sit in a class room
• Certain deeds, processes & performances
• Provide books, reading material which are
tangible .
• The entire experience is predominantly
intangible. Books /reading materials are
tangible.
Hitesh Manocha Introduction to services 4
 INTRODUCTION TO SERVICES
MARKETING
Car – Servicing
• Car is a good
• Car manufacturers offer warranties and
repair services .
• Even a goods manufacturer offer
services

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 INTRODUCTION TO SERVICES
MARKETING
Tangibility spectrum
• Products are of two types
1. Goods
Predominantly tangible
2. Services
Predominantly intangible
• Intangibility is the key determinant of
services.
• Intangibility is produced in all sectors of
the economy.
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 Tangibility Spectrum
Salt
 Soft Drinks

 Detergents
 Automobiles
 Cosmetics
Fast-food
 Outlets

 Intangible
Dominant

Tangible

Dominant Fast-food
Outlets 
Advertising
Agencies

Airlines 
Investment
Management 
Hitesh Manocha Introduction to services
Consulting  7
Teaching
 INTRODUCTION TO SERVICES
MARKETING
Trends in Services sector
• Services
• Dominant sector of the economy
• USA
By 2001, services contributed 80% of the GDP.
• India
It is 60% in 2006.

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 INTRODUCTION TO SERVICES
MARKETING
Services Sectors
• Not all services have grown at same rate .
• Phenomenal growth
– Information Technology
– Business process outsourcing
– Banking
– Telecom

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 INTRODUCTION TO SERVICES
MARKETING
Why Services Marketing
.
1. Services based economy.
2. Service as a business imperative in
manufacturing.
3. Deregulated industries and professional service
needs.
4. New technologies have created need for
services
5. Services Marketing is different.

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 INTRODUCTION TO SERVICES
MARKETING
1. Services based economy
• Major contributor of GDP is services.
• Increasing percentage of contribution
• Employment oriented
• Employment is a key concern in many
countries
• Six out of Ten jobs are created by the services
sector.
Governments have realized the importance of
creating and promoting services.
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 INTRODUCTION TO SERVICES
MARKETING
2. Service as a Business Imperative in
Manufacturing
• Now manufacturing sector
• Automobiles manufacturers
• Computers
• Aircrafts
• Industrial equipment
• Customers expect superior services from
manufacturers.
• Manufacturers differentiate their offering based on the
services provided.
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 INTRODUCTION TO SERVICES
MARKETING
1. Deregulated industries &
professional service needs
• Most Services
– Regulated / controlled by government.
• Recent years
– Trends of privatization
• Severe competition
• Demand for new services.
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 INTRODUCTION TO SERVICES
MARKETING
1. New Technologies have created need for
services.
• Rapid technological changes
• Pagers
• Cellular mobile
• Internet
• Entertainment
• Educating customers
• How these can be used to our advantage?
• Demand for service providers.
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 INTRODUCTION TO SERVICES
MARKETING
1. . Services Marketing is Different
• Can you handle services in the same
way as goods.
• No
• How to handle a product which is
intangible
– Selling car vs airlines
• Need for new skills.
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 INTRODUCTION TO SERVICES
MARKETING
Goods versus Services marketing

Four Major differences .

1. Intangibility
2. Heterogeneity
3. Simultaneous production and consumption
4. Perishability

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 Differences Between
Goods and Services

Intangibility Heterogeneity

Simultaneous
Production Perishability
and
Consumption
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 INTRODUCTION TO SERVICES
MARKETING
Intangibility

• Cannot be
– seen
– felt
– tasted
• Difficult to grasp mentally.
• Marketing implications.
• How to sell something which cannot be seen, felt or
tasted
• Can be copied by competitors.

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 INTRODUCTION TO SERVICES
MARKETING
Heterogenity

– Delivered by human beings

– No two services are exactly alike
– Human beings are moody
– Causes heterogenity

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 INTRODUCTION TO SERVICES
MARKETING
Simultaneous production and
consumption
• Goods
– First Produced
– Then consumed
• Services
• Most services exhibit simultaneous
production and consumption
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 INTRODUCTION TO SERVICES
MARKETING
Simultaneous production and
consumption
Beauty parlor
INTRODUCTION TO SERVICES MARKETING

– Services will start

– When customer is seated
– Production is instant
– Consumption is instant.
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 INTRODUCTION TO SERVICES
MARKETING
Simultaneous production and
consumption
Marketing Implications
• Mass production difficult
• Mistakes by employees visible
• Employees need to be well trained
• Services need to be decentralized
– Convenient locations
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 INTRODUCTION TO SERVICES
MARKETING
Perishability
• Services cannot be
– Saved
– Stored
– Resold
– Returned

Hitesh Manocha Introduction to services 23

 INTRODUCTION TO SERVICES
MARKETING
Perishability
Examples
• One empty seat in airlines.
• One empty room in hotel.
• Can you return a bad haircut.

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 INTRODUCTION TO SERVICES
MARKETING
Marketing Implications
Perishability
• Accurate demand forecasting
• Strong recovery strategies
• When things go wrong?
• How to regain customer goodwill ?

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 Services are Different
Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized Heterogeneous 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.
Production Simultaneous Customers participate in and affect the transaction.
separate from production and Customers affect each other.
consumption consumption Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand with
services.
Hitesh Manocha
Services cannot be returned or resold.
Introduction to services 26
 INTRODUCTION TO SERVICES
MARKETING
Services Marketing Triangle
• For service marketers to succeed three
types of marketing need to be carried
out.

1. External Marketing
2. Internal Marketing
3. Interactive Marketing

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 The Services Marketing Triangle
Company
(Management)

Internal External
Marketing Marketing
enabling setting
promises promises

Employees Interactive Marketing Customers

keeping promises

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 INTRODUCTION TO SERVICES
MARKETING
External Marketing
• Between Company & Customers
• What you communicate to customers?
• Create customer expectations
• Traditional promotional techniques

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 INTRODUCTION TO SERVICES
MARKETING
Example
Public Sector Banks
• Cheque withdrawl norms - 10 mts
• Draft preparation norms – 2 Hrs.
• Do you receive the same in the given
stipulated time?

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 INTRODUCTION TO SERVICES
MARKETING
Internal Marketing.
• Enables employees to keep promises
• Commitments to customers
• How to
– Train
– Motivate
– Reward the employees
• Employees have to deliver the promises made
in external Marketing
• Customer Satisfaction linked to employee
satisfaction
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 INTRODUCTION TO SERVICES
MARKETING

CitiBank
– Rewards best employees
– Free trips abroad
– Motivated employees keep customers happy
and satisfied.

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 INTRODUCTION TO SERVICES
MARKETING
Interactive Marketing
• Actual delivery of service
• Employee interact directly with
customers.
• Promise (as made in external marketing)
is delivered.

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 INTRODUCTION TO SERVICES
MARKETING
Interactive marketing
State Bank of India
• Cheque withdrawl.
• External marketing promise to customers – 10 minutes
• Who processes cheques - Employees
• Actual delivery time – 15 minutes
• What are the reasons for failure
• Demotivated employees
• Disappointed customers

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