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‡ Increasing importance of services in
economies
‡ All principles of marketing apply to
services
‡ The nature and special characteristics of
services
‡ Managing service quality, productivity and
personnel
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‡ How to position a service organization and

a brand

‡ The service marketing mix

‡ How businesses should manage service

encounters and service recovery

‡ Innovations in services
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‡ Difficult to provide a single definition of

service

‡ Concept of service has to be understood

either as an exclusive offering from a
company that is primarily intangible, or as a
part of the service-product mix that a
company offers
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‡ Service is an intangible offering with little or no
transfer of physical products to the customer

‡ Service is one part of product-service mix being

offered to customers

‡ The main offering is the product but the supplier also

provides some services

‡ Every product or service or any combination of a mix

of the two, ultimately is supposed to provide service
for customers
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‡ Advances in technology
‡ Growth in per capita income
‡ A trend towards outsourcing
‡ Deregulation
‡ Increasing growth in retailing due to
increase in propensity to consumer

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‡ Services impact customers more directly

than products do
‡ Marketing of services has to be more
deliberate and considered
‡ Service provider has to carefully audit his
resources and competencies
‡ Positioning must be razor sharp
‡ Services more intractable than products

 
 
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‡ Service provider must define service very

precisely and also design the appropriate
service-product mix

‡ Promotion more challenging due to

intangible nature of services

‡ Same basic service can be provided in

vastly different service facilities providing
different levels of amenities and luxuries

 
 
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‡ Same service can be delivered in various

ways

‡ Marketing mix conveys the positioning of a

service
 
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‡ Intangibility
‡ Inseparability
‡ Presence of other consumers
‡ Variability
‡ Perishability


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‡ Managing service quality
Companies rated higher on service quality
perform better in terms of market share
growth
Big gap exists between the expectations of
the customers and the level of the service
they get Real barriers while matching
expected and perceived service levels of
customers


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Does not understand customer requirements:

Misconception barriers arise when
companies misunderstand customer
expectations
No resources: A company may understand
customer expectations but is unwilling to
provide resources to meet them
Bad delivery: The company is not able to
deliver the expected service


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Management¶s will: A management

eager to improve quality is able to do it

Exaggerated expectations: Exaggerated

promises may become a problem
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Important to understand and meet
customer expectations
Consumers of services value not only the
outcome of the service encounter but also
the experience of taking part in it
Access: Is the service provided at
convenient locations and at convenient
times, with little waiting period in availing
the service?
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Reliability: Service provider should be

able to deliver the promised service each
time the customer decides to avail of it

Credibility: Can customers trust the

service company and its staff?

Security: Can the services be used

without risk?
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(nderstanding customer: If the

company understands the expectations
and also has the capability to serve them,
the customer is satisfied with the service
outcome

Responsiveness: How quickly do service

staff respond to customer problems,
requests and questions?

Behavior of employees: Do service staff

act in a friendly and polite manner?
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Competence: Performance of the primary

service will depend on the knowledge and
competencies of the service providers

Communication: Is the service described

clearly and accurately?

Physical evidence: The company should

provide physical evidence to customers
which will assure customers that they will
be provided a good service
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Measure of relationship between the
various types of inputs that are required
to produce the service and the service
output
Conflict between improving service
productivity and raising service quality
Technology can be used to improve
productivity and service quality
simultaneously


  
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Customer involvement in production can

be increased
Important to balance supply and demand
By smoothing demand or increasing
flexibility of supply, both productivity
and service quality can be achieved
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Quality of the service experience is
heavily dependent on staff-customer
interpersonal relationship
Companies need to treat their employees
well if customers have to be served well
by their employees
Nature of the job needs and appropriate
personality characteristics to be defined
sharply while selecting service staff


  
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Socialization allows the newly recruited

service professionals to experience the
culture and tasks of the organization
Maintaining a motivated workforce
Customer feedback essential to maintain
high standards of service quality
Employees of service organizations must
take pride in their jobs
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‡ Differentiate from competition on attributes

that target customers highly value
‡ Entails two decisions:
Choice of target market (where to
compete)
Creation of differential advantage (how to
compete)
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‡ Determine important choice criteria of

customers carefully
‡ Most important decision of a service
organization is selecting the factors on
which it will compete
‡ Select a few factors and provide superlative
performances in the chosen factors
‡ Target marketing
‡ Differential advantage
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Pure services are intangible
Higher perceived risk in decision
making process
People, physical evidence and processes
provide cues about the quality of the service
Brand name affects perceptions of service
Provide service trials wherever possible
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Intangible elements of service may be
difficult to communicate
Sales people should develop lists of
satisfied customers to be used in reference
selling
Word of mouth is critical to success
Acknowledge the dominant role of
personal influence in the choice process
and stimulate word of mouth
communication
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Persuade satisfied customers to inform

others of their satisfaction
Develop materials that customers can pass
on to others
Target opinion leaders in its advertising
campaign
Encourage potential customers to talk to
current customers
Communication should also be targeted at
employees
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An indicator of perceived quality
Important in matching demand and
supply
Price sensitivity key segmentation
variable
Setting fees levels:
Offset
Inducement
Divisionary
Guarantee
Predatory
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Distribution channels for services are
more direct
Production and consumption is
simultaneous
New technologies permit service
companies to provide services without
customers coming to their facility
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Service quality is inseparable from
quality of service providers
Set standards to improve quality of
service provided by employees and
monitor their performance
Training of employees crucial
Adopt a customer-first attitude than
putting own convenience first
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Employees of service organizations have

to be adept in multiple roles

Have empathy to judge the service

requirement and mood of the customer

Examine the role played by customers in

service environment

Seek to eliminate harmful interactions

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The environment in which the service is
delivered
Includes any tangible goods that facilitate
the performance and communication of the
service
Strengthen cues that customers search for
to judge the quality of services
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Procedures, mechanisms and flow of
activities by which a service is delivered
to customers
Control variations in services by targeting
smaller segment of customers
Process and its visibility are both
important for customers
Process should be employed only when it
is required to provide a service and not
because customers have come to expect it
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‡ A terrible ending usually dominates a

person¶s recollection of an experience
‡ Customers who are mentally engaged in a
task do not notice how long it takes
‡ Customers desperately want to make sense
of unexpected events
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Study service encounters from customers¶

point of view
‡ Finish strong
‡ Get the bad experience out of the way early
‡ Segment the pleasure, combine the pain
‡ Build commitment through choice
‡ Give people rituals and stick to them
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‡ Well-intentioned, prompt, and apt recovery
can assuage angry customers
‡ Everyone in the organization must have the
skill, motivation, and authority to make
service recovery an integral part of service
operations
‡ Production-oriented service-delivery systems
have helped in achieving consistently high
service standards
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‡ Inevitable problems will still arise, by

providing for service recovery
‡ Good service providers cover all the costs that
a failure incurs
‡ Customer¶s problem is an opportunity
‡ Companies must be responsive to customer
complaints, and encourage them to complain
‡ Monitor areas of the organization which are
likely to throw up problems more frequently
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‡ Solve customers¶ problems fast because

service problems quickly escalate
‡ Train frontline employees and empower them
‡ Give employees the authority, responsibility,
and incentives to help customers in unique
ways
‡ Let customers know about corrective
measures taken and the improvement
achieved

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‡ Difficulties in applying traditional methods of
research and development to services
‡ Experiments with new services are most useful
when they are conducted live , though
cautiously
‡ Improvements should be planned and
experimented incrementally
 
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‡ Personnel conducting the experiments must

be motivated
‡ Successful experiment has to be persisted
with
‡ Experiment only when it can be finally
implemented
‡ Conducting live experiments risky and
cumbersome, but may be inevitable