SERVICES MARKETING

Services are going to move in this decade to being the front edge of the industry.

Presented by Prof. S. C. Ghosh

WHAT DO THESE COMPANIES HAVE IN COMMON?

SERVICES

A service is any act or performance that one

party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

MARKETING OF SERVICES

TYPE OF SERVICE MARKETING

Three kinds of service marketing exists Company to employees 2. EXTERNAL: Company to customers 3. INTERACTIVE: Employees to customers 1. INTERNAL:

GROWING IMPORTANCE OF SERVICES

79% of workers are in service sector Services account for 68% of Indian GDP Service occupations will be responsible for all net job growth through 2005

GROWING IMPORTANCE OF SERVICES :

STRUCTURE OF EMPLOYMENT OVER TIME

Agriculture

Services

Industry

Time, per Capita Income

Source: IMF, 1997

GROWING IMPORTANCE OF SERVICES :

SERVICE SECTOR SIZE IN VARIOUS COUNTRIES (updated, 10/06)
Cayman Islands (95%), Jersey (93%) Bahamas (90%), Bermuda ( 89%) Luxembourg (83%) Panama (80%), USA (79%) Japan (74%), France (73%), U.K. (73%), Canada (71%) Mexico (69%), Australia (68%), Germany (68%)

Poland (66%), South Africa (65%)

Israel (60%), Russia (58%), S. Korea (56%) Argentina (53%), Brazil (51%)

India (48%)
China (40%) Saudi Arabia (33%)
10 20 30 40 50 60 70

Services as Percent of GDP

80 90

GROWING IMPORTANCE OF SERVICES : SERVICES DOMINATE

Services, 68% Agriculture, Forestry, Mining, Fishing, 2.3% Manufacturing and Construction, 17.3%

Government, 12.4% (mostly Services)

Source: Bureau of Economic Analysis, Survey of Current Business, May 2005, Table 1

INSIGHTS Private sector service industries account for over two-thirds of GDP Adding government services, total is almost four-fifths of GDP

SERVICE INDUSTRY - FACTS

Service industries generate over 2/3rd of GNP and employment in developed countries - ISSN Journal Volume 22, 2004) 9 out of 10 jobs are created by Services economy Delivering
Service Quality by Valerie, Parsuraman and Leonard;

Of the top 100 revenue earners worldwide, 55% are service firms www.service-growth.com Top service firm in revenue worldwide Wal-Mart is a service firm; Service firms produced 45% more revenue per employee than manufacturing firms;

REASONS FOR GROWTH OF SERVICE INDUSTRY & ITS EFFECT

Globalization Privatization/Deregulati on Increase in Affluence Increase in Leisure Time Women in Working Places

Changing Economies

Change in life style

Changing Technology
Range of New Products Product Complexity

Changing World
Increased Complexity in Life Increased Life Expectancy Ecology & Resource Concerns

TRANSFORMING SERVICE MARKET contd

Social Changes
Government Business Trends Advances in IT

Policies

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

TRANSFORMING SERVICE MARKET contd

Social Changes
Government Business Trends Advances in IT

Policies

Globalization

Changes in regulations Privatization New rules to protect customers, employees,

and the environment

New agreement on trade in services

TRANSFORMING SERVICE MARKET contd

Social Changes
Government Business Trends Advances in IT

Policies

Globalization

Rising consumer expectations More affluence More people short of time Increased desire for buying experiences versus
things

Rising consumer ownership of high tech

equipment

Easier access to information Immigration Growing but aging population

TRANSFORMING SERVICE MARKET contd

Social Changes
Government Business Trends Advances in IT

Policies

Globalization

Push to increase shareholder value Emphasis on productivity and cost savings Manufacturers add value through service and sell
services

More strategic alliances and outsourcing Focus on quality and customer satisfaction Growth of franchising Marketing emphasis by nonprofits

TRANSFORMING SERVICE ECONOMY contd

Social Changes
Government Business Trends Advances in IT

Policies

Globalization

Growth of the Internet Greater bandwidth Compact mobile equipment Wireless networking Faster, more powerful software Digitization of text, graphics, audio, video

TRANSFORMING SERVICE MARKET

Social Changes
Government Business Trends Advances in IT

Policies

Globalization

More companies operating on transnational basis Increased international travel International mergers and alliances Offshoring of customer service Foreign competitors invade domestic markets

Goods - things you can touch - tangible Services - things you cant touch - but you can see their effect intangible
services are not physical, they are intangible

DISTINCTIVE CHARACTERISTICS OF SERVICES COMPARED TO GOODS

GOODS SERVICES RESULTING IMPLICATIONS

Tangible

Intangible

Services cannot be inventoried Services cannot be redily displyed Services cannot be patented

Standardized

Heterogeneity

Service quality depends on many uncontrollable factors

Customer participate in and affect the transcations Decentralization may be requied Srevices cannot be resold or returned

Production seperate Simultaneous from consumption production and consumption Nonperishable Perishable

CHARACTERISTICS OF SERVICE MARKETS

CHARACTERISTICS OF SERVICE MARKETS & ITS MARKET IMPLICATIONS

INTANGIBILITY: Cant be inventoried Cant be easily patented Cant be readily displayed

HETEROGENEITY: Pricing is difficult Service Delivery & Customer Satisfaction Service Quality is always different

INSEPARABILITY: Simultaneous Production & Consumption Customers participation Employee affects the service outcome

PERISHABILITY: Cant be returned & resold Difficult to synchronize Supply & Demand with Services

THE FOUR IS OF SERVICE

INTANGIBILITY INCONSISTENCY Services cannot be held, touched, or seen before the purchase decision. Service quality varies with the capabilities of the people who provide the service. The consumer cannot separate the deliverer of the service from the service itself. The inventory cost of a service is the cost of paying the person used to provide the service along with the cost of any needed equipment.

INSEPARABILITY

INVENTORY

THE GOODS-SERVICES CONTINUUM

Canned Ready- AutoDraperies, RestRepairs: Air foods made mobiles Carpets aurant auto, house, travel clothes meals landscaping

Insurance, Consulting, Teaching

MOSTLY GOODS

MOSTLY SERVICES

GOODS AND SERVICES: SCALE OF ELEMENTAL DOMINANCE

SERVICE NEED & PRODUCT AS A CONSEQUENCE

NEED OF SERVICE AGE DENTAL CARE DIETING SERVICES EYE CARE POLLUTION CONTROL PRODUCTS
Senior Citizen Homes, Wheel Chairs, Sticks Dental Chairs, Dental Equipments Low Fat Foods, Low Sugar Sweets, Sugar Free Sweets/Ice creams Eye care Glasses, Eye Testing Machines Filters for Air/Water/Gas, Pollution Monitoring Machines Medicines, Medical Equipments

HOSPITALS COPYING SERVICES

HAIR STYLING

Photocopy Machines, Fax Machines

Hair Coloring Products, Hair Fixing/Shaping Products, Hair Dryers

THE SERVICE INDUSTRY

Transportation services Communication services Financial services (banking, insurance, real estate etc.) Tourism services Health services Auto repair services Business services Legal services Government services Education

SERVICE CLASSIFICATIONS
It is required to design & apply marketing techniques to completely satisfy the customer & increase profits & identify new emerging services. Classifications can be done on following basis: Classification by Industry Classification by Target Effect Skill level of service provider (Professional/ Nonprofessional) Labor intensiveness (People-based/Equipment-based) Degree of customer contact (High / Low) Goal of the service provider (Profit /Nonprofit)

CLASSIFICATION BY INDUSTRY
a. b. c. d. e. f. g. h. i. j. k. l. Entertainment industry Education Telecommunications Finance & Insurance Transportation Public utilities Government services Health Hospitability Industry Business services Telecommunications Trading

CLASSIFICATION BY TARGET EFFECT

Based on Degree Of Customer Involvement: ( Lovelock)

1.

People Processing: Services aimed at physical care e.g. Healthcare, clinics, restaurant, hospitals, hair stylists, fitness centers
Mental Stimulus Processing: Services aimed at mind of customer e.g. Education, information, entertainment, consulting, psychotherapy Possession Processing: Services aimed at physical possession & tangible assets e.g. repair & maintenance, laundry, repair services, landscaping, house cleaning services Information Processing : Services for intangible assets e.g. Banking, legal consultation, brokerage, financial services.

2.

3.

4.

SKILL LEVEL OF SERVICE PROVIDER

TEACHER
DOCTOR

ENGINEER
ACCOUNTANT

LABOR INTENSIVENESS

MECHANIC ELECTRICIAN LABOR PLUMBER ARTISAN

DEGREE OF CUSTOMER CONTACT

High Degree (Every day) TV channels, mobile etc.
Moderate Degree (Regular) Teacher, Barber, washer man etc.

Low Degree ( Occasional ) Priest, Doctors etc.

SERVICE INDUSTRY CATEGORIES

Other (except government) 3.6% Accommodation and food services 4.0% Arts, entertainment, and recreation 1.5% Healthcare and social assistance 10.4% Educational services 1.3% Professional and business services 17.3%

Real estate and rental and leasing 18.7% Finance and insurance 12.6% Information 7.1% Transportation and warehousing 4.4% Retail trade 10.3% Wholesale trade 8.9%

INDUSTRIAL SERVICES

Equipment based

INDUSTRIAL SERVICES
Advisory & Consultative Facilitating

INDUSTRIAL SERVICES
Utility Services Project Management Services Equipment Testing Services Transportation Services Financial Services Insurance Services

Equipment Based Services

Facilitating Services

Advisory & Consultative Services

ERP Enterprise Resource Planning Market Research Engineering Services

THANK YOU