Introduction to services

Goods V/s Services

Services Marketing Mix : 7 Ps of services
marketing
The Services Marketing triangle

What is a Service?
A service is any act of performance that one party can
offer 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.
It is the part of the product or the full product for which the
customer is willing to see value and pay for it.

Copyright 2009 Pearson Education, Inc.

What is a service?
It is intangible.
It does not result in ownership.
It may or may not be attached with a physical
product

Most products have a service component

They could be
Equipment based
People based varying skill levels

Salt

Soft Drinks
Detergents
Automobiles
Cosmetics Fast-food
Outlets

Tangible
Dominant

Fast-food
Outlets

Intangible
Dominant

Advertising
Agencies
Airlines
Investment
Management
Consulting

Teaching

Services could meet

Personal needs haircuts, tution, massage
parlours
Business needs courier services, office
cleaning services, delivering fresh flowers

Examples of Service Industries

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
ski resort, rafting

Travel
airline, travel agency, theme park

Others
hair styling, pest control, plumbing, lawn maintenance, counseling
services, health club, interior design
1-8

Importance of service sector

More than half of our GDP is accounted for
from the services sector
This sector dominates with the best jobs, best
talent and best incomes
The services sector has been growing at a
healthy rate of in recent years

India (2012)

GDP by
Industry %

Labour force by
Industry %

Agriculture

13.9

52.0

Industry

27.1

14.0

Services

59.0

34.0

100.00

100.00

India

Agriculture

Industry

Services

1950-51

53.1

16.6

30.3

1960-61

48.7

20.5

30.8

1970-71

42.3

24

33.8

1980-81

36.1

25.9

38

1990-91

29.6

27.7

42.7

2000-01

22.3

27.3

50.4

2011-12 E

13.9

27

59

Contributions of Service Industries to

U.S. Gross Domestic Product

1-12

How are goods different from

services from a marketing standpoint?

Characteristics of Services
Compared to Goods
Intangibility

Simultaneous
Production
and
Consumption

Heterogeneity

Perishability

1-14

Comparing Goods and Services

1-15

Implications of Intangibility
Services cannot be inventoried

Services cannot be easily patented

Services cannot be readily displayed or
communicated
Pricing is difficult
E.g. Consulting, Advertising.

1-16

Implications of Heterogeneity
Service delivery and customer satisfaction
depend on employee and customer actions
Service quality depends on many
uncontrollable factors
There is no sure knowledge that the service
delivered matches what was planned and
promoted
E.g. Visit to Hotel, accountant, air travel
1-17

Implications of Simultaneous
Production and Consumption
Customers participate in and affect the
transaction
Employees affect the service outcome

Mass production is difficult

Real-time nature Interact

1-18

Implications of Perishability
It is difficult to synchronize supply and
demand with services
Services cannot be returned or resold

Demand forecasting

E.g. Refunds /Weekend rush / Festival rush

1-19

Traditional Marketing Mix

Elements an organization controls that can
be used to satisfy or communicate with
customers:

Product
Price
Place
Promotion

1-20

Expanded Marketing Mix for

Services

1-21

Ways to Use the 7 Ps

Overall Strategic
Assessment

Specific Service
Implementation

How effective is a
firms service
marketing mix?
Is the mix wellaligned with overall
vision and strategy?
What are the
strengths and
weaknesses in terms
of the 7 Ps?

Who is the customer?

What is the service?
How effectively does
the service marketing
mix for a service
communicate its
benefits and quality?
What changes/
improvements are
needed?

1-22

All Human
factors who play
a part in service
delivery & thus
influence the
buyers
perceptions

The environment in
which the service is
delivered and where
the firm and the
customer interact.
Any other tangible
components that
facilitate
performance or
communication of
the service.

The actual procedures ,

mechanisms and flow of
activities by which the
service is delivered the
service delivery and
operating systems.

Services Marketing is about promises

promises made and kept to customers

Services Triangle is strategic framework

which visually reinforces the importance of
people in the ability of firms to keep their
promises and succeed in building customer
relationships.

Company
(Management)
External
Marketing

Internal
Marketing
Enabling the
Promise

Employees

Setting the
Promise

Interactive Marketing
Delivering the promise

Source: Services Marketing, McGraw Hill publications

Customers

 Focus on any service company

What is the promise made by the company.
Are there specific challenges / barriers to fulfil the
promise?
What are the internal marketing activities which
the company must engage in to deliver the
promise.