So, Jared

4AMC

Foundation of Services Marketing

The American Marketing Association defines services as - “Activities, benefits and

satisfactions which are offered for sale or are provided in connection with the sale of goods.”

The defining characteristics of a service are:

Intangibility: Services are intangible and do not have a physical existence. Hence services
cannot be touched, held, tasted or smelt. This is most defining feature of a service and that
which primarily differentiates it from a product. Also, it poses a unique challenge to those
engaged in marketing a service as they need to attach tangible attributes to an otherwise
intangible offering.

1. Heterogeneity/Variability: Given the very nature of services, each service offering is

unique and cannot be exactly repeated even by the same service provider. While
products can be mass produced and be homogenous the same is not true of services.
Example: All burgers of a particular flavor at McDonalds are almost identical.
However, the same is not true of the service rendered by the same counter staff
consecutively to two customers.
2. Perishability: Services cannot be stored, saved, returned or resold once they have
been used. Once rendered to a customer the service is completely consumed and
cannot be delivered to another customer. Example: A customer dissatisfied with the
services of a barber cannot return the service of the haircut that was rendered to
him. At the most he may decide not to visit that particular barber in the future.
3. Inseparability/Simultaneity of production and consumption: This refers to the fact
that services are generated and consumed within the same time frame. Example: a
haircut is delivered to and consumed by a customer simultaneously unlike, say, a
takeaway burger which the customer may consume even after a few hours of
purchase. Moreover, it is very difficult to separate a service from the service
provider. Example: the barber is necessarily a part of the service of a haircut that he
is delivering to his customer.
Types of Services

1. Core Services: A service that is the primary purpose of the transaction. Example: a
haircut or the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the sale of a
tangible product. Example: Home delivery options offered by restaurants above a
minimum bill value.

Difference between Goods and Services

Given below are the fundamental differences between physical goods and services:

Goods Services

A physical commodity A process or activity

Tangible Intangible

Homogenous Heterogeneous

Production and distribution are separation Production, distribution and consumption are
from their consumption simultaneous processes

Can be stored Cannot be stored

Transfer of ownership is possible Transfer of ownership is not possible

Examples of services marketing

1. Food Services:
Restaurants, cafeterias and hotels are offering food services to numerous individuals and
families who have firmly developed the habit of eating out. These eating places are ever-
growing as the service they sell is definitely wanted by the public. Small eating places offer
simple and cheaper meals.
Five-star hotels offer elegant and costly food with superb services and royal comforts.
Increasing tourism has also boosted the development of the hotel industry. We also have
caterers who specialize in supplying food and service for dinners and parties at our
residences on ceremonial and special occasions.
2. Hotels and Motels:
Lakhs of people, every day, use lodging and boarding services all over the country. Tourism,
hotels and motels are growing in numbers every year. Modern hotels provide a luxurious life
to travelers and tourists. Tourism is now considered as a major source of foreign exchange
in all countries. Modern hotels provide numerous amenities, comforts, refined and elegant
services.

3. Personal Care Services:

Rising standards of living brought about the development in the personal care services
(helping a customer to be well groomed). These services are offered by health and fitness
centers, beauty parlors, barber shops, laundries, drycleaners, garment repair shops, shoe
repair shops and so on.

Health and fitness organizations are growing in importance and their popularity in all
countries due to an ever increasing demand for improving individual personality and
efficiency. In the anti-fat modern culture and lifestyle, figure consciousness and weight
reduction (due to obesity) have assumed unique importance. People have money and they
do not mind spending on themselves.

4. Car Service Firms (Garages)

Lakhs of car owners are dependent on car service centers. Petrol pumps sell both goods and
services because of which they are now called service stations. There are also numerous
garages and repair shops specializing in repairs and maintenance of cars, trucks,
motorcycles and scooters.

5. Entertainment Services:
Increasing purchasing power and more leisure time are responsible for the steady growth of
entertainment services. Movies, sports, amusement parks, circuses, car racing, cricket,
billiards, music, dancing and drama are such popular forms of organized entertainment
today.

6. Transport Services:
Railways, buses, ships and airplanes provide transport services for moving people and goods
from one place to another. The fastest growth has taken place in air transport. A person can
have a round-the-world trip in just one fortnight. Air transport has become very popular in
international tourism.

7. Communication Services:
Nowadays, we have the latest means of communication such as the internet, mobile,
telephone, telegraph, telex and postal services at our disposal. We also have television,
 mobile and satellite communications all over the world. The current technology has
contributed tremendously to the rapid growth of all types of communication services.

8. Insurance Services:
Insurance gives protection against risk, e.g. accident, fire, death, theft, sickness,
unemployment and so on. People can save for their children’s education, daughter’s
marriage or for their retirement. Security of life and property provided by insurance gives us
freedom from anxiety and peace of mind.

9. Financial Services:
Many consumers require the service of banks for financing their purchases of durable goods
usually through installment sales. In foreign countries, they even have easy house financing
through bank loans. Home owning is made easy with the help of mortgage loans. The
modern high standard of living has become a reality for masses due to a customer-oriented
marketing approach adopted by banks recently.

The Services Marketing Triangle (or Services Triangle) shows the key actors involved in marketing a
service business. It also shows the key marketing activities that occur between those actors.

Each actor works together to develop, promote, and deliver a company’s service. As you can
see from the diagram we represent actors by the points of the triangle. Our actors are:
 Company: refers to the leadership team of the company in question.
 Employees: refers to all employees, including subcontractors who deliver the company’s

service.
 Customers: refers to all customers and potential customers of the company.
The lines between the points show the different types of marketing that must occur:
 External Marketing: occurs between the company and its customers.
 Internal Marketing: occurs between the company and its employees.
 Interactive Marketing: occurs between the employees and the customers.

External Marketing

Companies use external marketing to make promises to customers. External marketing is

any communication to customers (or potential customers) that happens before service
delivery starts.
Forms of external marketing include:

 Advertising

 Personal selling

 Public relations (PR)

 Direct marketing

We use external marketing to achieve many aims including:

 Creating awareness.

 Setting price expectations.

 Setting service level expectations.

 Informing customers if any prerequisites that must be in place before they can use the
service.

Internal Marketing

Within a services business, we view employees as internal customers. They are a market
which we must please first as a company. The leadership team should be focused on
satisfying its employees so that they want to better serve customers.
Internal marketing involves motivating employees to work as a team to make customers
satisfied. This is obviously true for customer service representatives. It can equally be
applied to all employees. This results in everyone, at all levels of the organization, being
empowered to deliver great customer service.

Key components of internal marketing include:

 Motivating employees

 Teaching customer satisfaction techniques

 Communicating company goals regularly

 Management of change

 Training staff on how to use the company’s services

 Good pay and working conditions

Interactive Marketing

Interactive marketing occurs when employees and customers interact. It is here where the
promises made during external marketing are either kept or broken by employees or sub-
contractors.

Each significant interaction between an employee and a customer is known as a service

encounter.

Interactive marketing is important because it establishes both short-term and long-term

satisfaction. That is, if the customer is satisfied with the service they received in the short-
term, they are more likely to be satisfied over the longer term.