Fundamentals of services marketing

Learning Outcomes
• Understanding the concept of services marketing
• Appreciate the unique characteristics of services
• To understand the categories of services
• To understand the services marketing mix
• To understand consumer behaviour in services
• According to American Marketing Association services are
defined as “activities, benefits or satisfactions which are offered
for sale or provided in connection with the sale of goods.”
• According to Philip Kotler and Bloom services is defined as “any
activity or benefit 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.”
Characteristics of services
1.Intangibility–Services are cannot be touched or hold, they are
intangible in nature.
2. Inseparability–In case of services the production, distribution, and
consumption takes place simultaneously.
3. Variability–It is impossible to provide similar service every time.
4. Perishability–You can store goods, but it is not so in the case
of services.
5. Participation of customer–Customer is co-producer in production of
services
6 No ownership–In the sale of services,transferof ownership not take
place.
Marketing of Services
• A different marketing approach is necessary for services marketing,
because services differ from goods in many respects.
• Customer Service in a service firm is highly interactive in nature.
• Customer interacts with the firm physical facilities, personnel, and
tangible elements like the price of the service.
• The success of any service firm depends on how its
performance is judged and perceived by the customer.
* The unique characteristics of services calls for different approaches
of marketing of services.
Importance of Marketing of Services
• Given the intangibility of services, marketing them becomes a
particularly challenging and yet extremely important task.
• A key differentiator:Due to the increasing homogeneity in product
offerings, the attendant services provided are emerging as a key
differentiator in the mind of the consumers.
• marketers can leverage on the service offering to differentiate
themselves from the competition and attract consumers.
• Importance of relationships:Relationships are a key factor when it
comes to the marketing of services.
• the need to listen to the needs of the customer and fulfill them
through the appropriate service offering and build a long lasting
relationship which would lead to repeat sales and positive word of
mouth
• Customer Retention:Given today’s highly competitive scenario where
multiple providers are vying for a limited pool of customers, retaining
customers is even more important than attracting new ones.
• offer greater scope for customization according to customer
requirements thus offering increased satisfaction leading to higher
customer retention.
Broad categories of services
7ps of services Marketing
Product: the ‘product’ is intangible, heterogeneous and perishable.
• Moreover, its production and consumption are inseparable.
• There is scope for customizing the offering as per customer
requirements and the actual customer encounter therefore assumes
particular significance.
Pricing: Pricing of services is tougher than pricing of goods.
• The final price for the service is then arrived at by including a mark up
for an adequate profit margin.
Place: Since service delivery is concurrent with its production and
cannot be stored or transported, the location of the service product
assumes importance.
• Service providers have to give special thought to where the service
would be provided.
Promotion: Since a service offering can be easily replicated promotion
becomes crucial in differentiating a service offering in the mind of the
consumer.
People: People are a defining factor in a service delivery process, since
a service is inseparable from the person providing it
• customer service training for staff has become a top priority for many
organizations today.
Process: The process of service delivery is crucial since it ensures that
the same standard of service is repeatedly delivered to the customers.
• Physical Evidence: Since services are intangible in nature most service
providers strive to incorporate certain tangible elements into their
offering to enhance customer experience.
Customer behaviour in service contexts:
The three stage model
The Three-Stage Model
• Pre-purchase Stage
• Service Encounter Stage
• Post-purchase Stage
Discussion questions
• Define services marketing
• What makes services different from goods
• Describe the four broad categories of services
• Discuss the three stage model and the consumer decision making
model.