Services Marketing

Lecture 1-2: Introduction to Services Marketing

Instructor: Syed Muhammad Zubair Azam
Institute: SZABIST, Dubai.
zubairazam6@gmail.com

Majority of the material presented in these slides is adapted from Books written by Lovelock, and Gronroos.

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 Complete the Story
In a small village near Lahore, there was a young rice merchant,
Mr. Nawab. He was one of the six rice merchants in that village. He
was sitting in his store waiting for customers, but business was not
good. He was not receiving sufficient orders.

What shall He do?

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Mr Nawab Asked
• How many members there were in the household;
• How many bowls of rice they cooked on any given day;
• The size of rice jar in the household.

Mr Nawab Offered every customer:

• Free Home Delivery;
• A service to replenish the household’s rice jar automatically at regular
intervals
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Key Aspects of His Service
• Service is support for customer’s individual processes in a way that
facilitate their value creation,
• And this support is enabled when knowledge and skills are used on
resources.
• The ultimate goal of service-based business is to facilitate value
creation for the customer, which would enable service provider to
capture value in return with service as a mediator.
• Service is a process, where service provider’s resources and the
customer often interact to some extent.
• To become a service provider, the resources of the firm’s offering
can be of any kind.
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• Amazon facililtates other business like NETFLIX, through its “Amazon Web
services”, in creation, communication and delivery of value to their customers.
• HUAWEI facilitates Du Telecom in attracting the best engineers, and managing
infrastructure so that Du’s customers are satisfied.
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Amazon Web Services Clients

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Some Screenshots of Customers reviews on
Zomato

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Key-relationship-based characteristics
• The service provider and customer engage in long-term business
contact.
• The relationship requires that the service provider gains insight into
customer’s everyday processes.
• The goal of the relationship is mutual value creation, i.e., a Win-Win
Situation.

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 Service(s) as an activity (e.g.,
Restaurants, Bars, Repairs
shops, maintenance,
transportation, and Cafés)
Service – Two
different
Service as a perspective on
meanings business and marketing
(regardless of whether the core
of business is physical product
(Goods) or a service activity )
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Service as An activity
A service is a series of activities that normally take place in interactions
between the customer and service employees and/or the service
provider’s physical products or goods and/or IT and other systems,
which are provided as solution to customer’s problems.

Key Characteristics
— Services are Processes or activities.
— services are at least partly produced and simultaneously consumed.
— the customer participates as a co-producer in service (production)
process either directly or indirectly.

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 Service as a Perspective is multifaceted
From Firm’s perspective (Provider service Logic)
— Service is to facilitate & support someone’s practices (processes,
activities; physical mental) in a way that contributes to this person’s or
organizations value creation (e.g., consultation industry, healthcare
industry, education industry and even consumer goods industry [3M])

From Customer’s perspective (customer service Logic)

— Service is what a customer experiences when he/she/the organization
integrates resources bought (goods, service activities, information etc.)
with other available resources and applies skill held by him/her/the
organization (e.g., Targus – the presentation remote, Banking services -
Debit cards and ATM machines, cookbooks, Cinemas, Apps and smart
phones etc.)
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 How do customers experience offerings?
Case: Lift Services and Maintenance
The Firm: Big in the Lift (elevator) business
The Problem: The service and maintenance brought in 50 % of turnover,
but the firm had problems to keep its customers.

First action: A survey to investigate how the firm’s customers

experienced its service operations (repair and
maintenance)

The message: The firm’s services are expensive and quality is low.

Management reaction: Confusion: “”we have the best resources and

systems in the industry – by far 20
 Case: Lift Services and Maintenance

2nd Management action: A qualitative study using personal interviews ,

basically with one question:

“What mistakes are we doing?”

Scope: Key representative of 100 recently lost customers were

interviewed.

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 Case: Lift Services and Maintenance
What the unsatisfied customers said:
— “No problem with actual repair and maintenance.

— “the way the maintenance people behave is irritating”

— “we cannot communicate with them”
— “frequently, we don’t understand their way of thinking”
— “It is often difficult to get in touch with you”
— “it is often difficult for us to adapt to your system”
— “Timetables that are not kept – are a problem for us, and is irritating”
— “we don’t know how much we can trust you”

— “because of this,, we think your service is expensive”

Management action: There is a quality problem after all, but it depends on
other reasons than we originally thought..
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Read The Case On KIVA

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Insights drawn from Discussed Cases
Three important strategic requirements of a relationship strategy
• Redefine the Business as a service business and they key competitive
element as service competition (Competing with service and a total service
offering, not just sale of a specific product (e.g., Rice alone).
• Look at the organization from process management perspective and not
from a functionalistic perspective (to manage the process of supporting and
facilitating value creation for the villagers, not only to distribute products
(e.g., Rice)
• Establish Partnerships and a network to handle the whole service process
(Close contacts with well-known rice farmers).

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 Conclusion 1: what does it take to be a service business?
The type of resources
Instead, it is “the
needed in facilitating Thus, any firm can be
and supporting perspective taken”
that matters. a service business:
customer’s processes
– products, service Because, a firm may
activities, have wonderful
information… --- is resources but it may
Being a service
not important. still fail.
business is a
strategic choice.

Operating as a service
business requires a service-
center mental model in the
organization (Service
Culture).
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Conclusion 2: How is Service Experienced by Customers?

Perceived
Quality

Image

Technical Functional • Trustworthiness

Quality Quality • Servicescape
• Capability to handle
“What?” “How?”

Outcome of the service • Attitudes

process • Behaviours
• Accessibility
• Punctuality
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 Customer Competitor Interfunctional
orientation Orientation Co-ordination
• Organization has • Organizations • The manner in
sufficient understanding of which an
understanding of Strengths, organization uses
its target weaknesses, it’s resources in
customers. capabilities, and creating superior
strategies of value for target
Rivals. customers.

Orientations in Services Context

 Intangibility
Heterogeneity
Inseparability
Characteristics Perishability
of Services
Experiences
Tradability
Transfer of Ownership
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Tangibility Spectrum

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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 Inseparability • Customers participate in and affect the transaction.

separate from • Customers affect each other.
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.
• Services cannot be returned or resold.
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Classifications
1. What is the nature of the service act?

2. What type of relationship does the service organization have with

its customers?

3. How much is there for customization and judgment on the part of

the service provider?

4. What is the nature of demand and supply for the service?

5. How is the service delivered?

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Understanding the Nature of the Service Act?

• Does the customer needs to be physically present?

• Does the customer need to be mentally present during the delivery of the service?
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Class Activity
 Categories following Services according to their Nature of
the Service Act.
1. Passenger Transportation 10.Freight Transportation 20.Advertising campaign
2. Health care 11.Property Repair and 21.Music Concerts
3. Lodging Maintenance 22.Psychotherapy
4. Beauty Salons 12.Warehousing/Storage 23.Religion (Preaching)
5. Physical Therapy 13.Office Cleaning services 24.Voice Telephone
6. Laundry and Dry Cleaning 14.Retail Distribution 25.Fitness Centers
7. Refueling 15.Public Relations Efforts 26.Restaurants/Bars
8. Landscape Gardening 16.Broadcasting/Cable 27.Barbers
9. Waste Disposal/Recycling 17.Management Consulting 28.Funeral Services
18.Education 29.Marriage Services
19.Information Services
30. Auditing 31. account management in Banks 32. Data Warehouse 33. Satellite Navigation,
34. Auto Insurance 35. Legal Services for startups 36. Software Development 37. Market
Research 33
Customization and Judgment in Service Delivery

Extent to which Customer Extent to Which Service Characteristics Are Customized

Contact Personnel Exercise
Judgment in Meeting High Low
Individual Customer Needs
Legal service Public education
Health care / surgery Preventive health
High programs
Plumber
Tutorial service
Telephone service Public transportation
Low Hotel services Fast food restaurant
Retail banking Movie theater

• Some services come standardized, others with some sort of customization, and others
are fully customized.
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What Type of Relationship Does the Service Organization
has with its Customers?
Nature of Type of Relationship between the Service Organization and its Customers?
Service Delivery “Membership” Relationship No Formal Relationship

Insurance Radio station

Continuous Telephone subscription Police protection
Delivery of College enrollment Lighthouse
Service Banking Public highway
AAA
Long distance phone call Car rental
Theatre sales subscription Mail service
Discrete
Commuter ticket or transit pass Toll highway
Transactions
Pay phone
Public transportation
• Does the service organization enter into a ”membership” with its customers or is
there a no formal relationship? 35
What is the Nature of Demand for the Service Relative to
Supply
Extent to which Supply Extent of Demand Fluctuation over time
is Constrained Wide Narrow

Peek Demand Can Electricity Insurance

Usually Be Met w/o a Natural gas Legal services
Major Delay Police and fire services Banking

Accounting and tax Similar services to 2 but

Peek Demand Regularly preparation which have insufficient
Exceeds Capacity Passenger transportation capacity for their base
Restaurants level of business

• What is the common cycle or recurring demand of the service?

• What are the fundamental causes that create the demand fluctuations of the service?
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How is the Service Delivered?
Nature of interaction between Availability of Service Outlets
Customer and Service Organization Single Site Multiple Site

Customer Goes to Service Theater Bus Service

Organization Barber Shop Fast food chain

Lawn care service Mail delivery

Peek Demand Can Usually Be Met w/o Pest control service AAA emergency
a Major Delay Taxi repairs

Peek Demand Regularly Exceeds Credit card company Broadcast network

Capacity Local TV station Telephone company

• What method is used to deliver the service?

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Classifications based on Service Fields
Professional and Business Healthcare (Diagnosis,
Services (business, treatment, prevention,
engineering, legal, hospitalization, and
investment, insurance, emergency room operations,
banking, Logistics etc.) etc.)

State and Local governments

(firefighting, law
enforcement, roadway Education (Schools and
maintenance, economic Colleges)
development for the region,
etc.)
Approaches To Marketing
• 7 P’s Approach • SIVA Approach
• Product
• Solution, Instead of Product
• Price
• Promotion • Information, Instead of Promotion
• Placement
• Process • Value, Instead of Price
• People • Access, Instead of Placement
• Physical Evidence

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Growth of service Sector
Share of
Employment

Time, Per Capita Income

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Estimated size of the service sector in selected countries as a
percentage of GDP

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Thank You!!!!

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