Services Marketing

Dr. Arun Kumar

Assistant Professor
Room No. F-207
ABV-IIITM, Gwalior
arunkumar@iiitm.ac.in
 Course Objectives
To develop an understanding of the services
and related concepts
To enable you to analyze and develop services
marketing strategies in different marketing
environment
To explore recent trends in Services marketing
 Course Content
• Introduction to Services
• The Gaps Model of Service Quality
• Customer expectations and perceptions of
services
• Listening to customers and forging strong
relationships
• Service recovery
• Service innovation and design
 Course Content
Service innovation and design
Customer defined service standards
Employees and customers role in service
Integrated service marketing communications
Pricing of services
 Evaluation Components
Quiz-1: 20%
Case studies: 20%
Project: 20%
Major: 30%
Class participation and attendance: 10%
 Marketing
What is Marketing
Marketing: A Broad Perspective
 Introduction
• All Businesses are Service Businesses

• Service Industries, Service as a Product,

Customer Service, and Derived Service
Tangibility Spectrum
• Service as a Business Imperative in Goods-
Focused Businesses
– Commoditization of products in many industries
has resulted in price and margin pressures on
many physical goods
– Demanding customers specially in B2B
• Deregulated Industries and Professional
Service Needs
• Service Marketing is Different
• Service Equals Profits
• Service Stinks (SST)
How to Increase Quality Control
• Invest in good hiring and training
procedures
– Competence, courtesy, credibility, reliability,
responsiveness, communication
• Standardize the service-performance
process
– Service blueprint
• Monitor customer satisfaction
– Customer survey, comparison shopping
– GE, Citibank
A Blueprint for Overnight Hotel
Stay
Start
No class piques End of
interest Process
See a catalog and Do research
browse through • Call and wait for
See class that
someone to help Decide not to take
looks interesting
• Visit college
• Select teacher
Do research
• Call and wait for Do more research
Decide to take a
someone to help Pick a course • Call and wait for Decide to register
course on own
• Visit college someone to help
• Order catalog

Register by mail Register by phone

End Unsuccessful

Go to registrar Call school

Attend second class School receives and
• Wait for someone Wait for someone to help
etc. processes registration
• Try to get in Complete registration process

Enrollment confirmation sent

Successful Like class, but
not registered
Course full
Keep class Enrolled

Drop class Do not like Attend first class Still want class End of
process
Service quality and customer satisfaction

Value Proposition Delivered Value

Expected Value Perceived Value

Customer Satisfaction = f(Perceived Value less Expected Value)

 f(Perceived Value less Expected Value) = Customer Satisfaction

Expected Value Perceived Value Customer Satisfaction

Firm A 5 hours 6 hours low
Firm B 8 hours 7 hours high
Examples (Differentiating
with Speed)
• Hotel Windsor Manor, Bangalore
– Half-an-hour room service order
– No payment required if the promise is unfulfilled
• Hotel Taj West-end, Bangalore
– Business traveler
– Time constraints
– 2-minutes check-in; 4-minutes baggage delivery; 5-
minutes room service(beverages)
– You have extra minutes for business
Matching Demand and
Supply
Demand side Supply side
• Differential pricing • Part-time
• Nonpeak demand employees
• Complementary • Peak-time efficiency
services • Increased consumer
• Reservation participation
systems • Shared services
• Facilities for future
expansion
Marketing Strategies for
Service Firms
• A shifting customer relationship
– US Firms scenario
Airlines, Hotels, Telecom :
– Forrester Research Results High fixed cost+ small
• Walmart, Radioshack, Cingular variable cost
Delhi-Mumbai
• Profit tiers 5000-12000 Rs.

• High vs. Low

• Customer empowerment
• Separate prices for each service element
• Coproduction
• Customer Failures
Root Causes of Customer Failure
Solutions to Customer
Failures
• Redesign processes and redefine customer
roles to simplify service encounters
• Incorporate the right technology to aid
employees and customers
• Create high-performance customers by
enhancing their role clarity, motivation, and
ability
• Encourage customer citizenship where
customers help customers
IBM

• Receives around 1lac complaints annually

• My computer won’t work
• Add xxx to your software etc.
• Assigning complaint owner for each
complaint
• 95% completely addressed in 5-7 days
Three Types of Marketing in Service
Industries
Three Types of Marketing in
Service Industries
• External marketing
• Internal marketing ICICI & HDFC
– Case: Singapore Airlines Maintaining
relationships without
• Interactive marketing face-to-face
interactions
– Use of technology
Factors Leading to Customer
Switching Behavior
• Pricing
• Inconvenience
• Core Service Failure Test of service
Quality:
• Service Encounter Failures Do the customers keep
coming back
• Response to Service Failure
• Competition
• Ethical Problems
• Involuntary Switching
Service-Quality Model
The service-quality model highlights the main requirements for delivering high
service quality. It identifies five gaps that cause unsuccessful delivery:

Word-of-mouth
Personal needs Past experience
communications

Expected service
Gap 5
Perceived service

Customer External communications

Gap 1 Service delivery
Gap to customers
Gap 3 Gap 4
Service Service quality specifications
Providers Gap 2
Gap The firm’s perceptions of
customer expectations
• Gap between consumer expectation and
management perception
• Gap between management perception and
service-quality specifications
• Gap between service-quality specifications and
service delivery
• Gap between service delivery and external
communications
• Gap between perceived service and expected
service
• Role of technology in minimizing the gaps
Determinants of Service
Quality
SERVQUAL Model
Tangibles Appearance of communication materials, equipment,
personnel, and physical facilities
Reliability Ability to perform the promised service accurately and
dependably
Responsiveness Willingness to help customers and provide prompt service
Assurance Courtesy and knowledge of employees, and ability to convey
confidence and trust
Empathy Provision of caring, individualized attention to customers
Kirana stores compete on:
Home delivery
Personal attention
Financing
As compared to Big Bazaar and
Reliance Fresh
Customer Importance and Performance
Ratings for an Auto Dealership
Importance-Performance
Analysis
Service Quality Expectations and Performance

Trouble Keep it up

High
Customer
Performance
Expectations
Low

Low High
Be low key Too much effort
Customer Performance Perceptions
Pre-purchase During purchase Post-purchase
 Customer service
strategy

Top management
Human resource
support and
involvement
High-level management
customer
service

Measuring
Service
customer service
infrastructure
quality
Best Practices
• Strategic Concept
• Hotel Chains
• Top-Management Commitment
• Wipro, Infosys, Apollo Hospital, McDonald’s
• High Standards
• Self-Service Technologies
• IBM
• Monitoring Systems
• Satisfying Customer Complaints
• Satisfying Employees
• Case: India Post
Customer Service Dimensions: Flower of Customer Service

Information
Billing Order-taking

Safekeeping
Case: Indigo Airlines
• New to established brand
• Most preferred carrier even for business class
Using mass communication in launch markets
• “Indigo in your town..ready for take-off”
• Comfortable fares and easy access
• TV Commercial: economic and easier
Targeting the corporate passenger: On time, every time
More routes, better frequency
Special package to corporate clients
Customers expect more is a challenge

Starbucks goes into minute details of the process

Roles That Brands Play
Brands reduce risk